Types of Trading in Stock Market Explained

It is very important for every new trader to understand the types of trading in stock market. There are many methods of trading in the stock market-some like intraday, some do swing or positional trading. Thousands of people follow different trading styles every day on exchanges like NSE and BSE in India. But to be successful it is important to understand which trading style fits best according to your time, risk and capital. In this blog, we will explore all the major trading types of the stock market in simple language.

What is Trading in the Stock Market?

Trading in the stock market means buying and selling stocks, futures, option or any other financial instrument with the intention of making a profit in a short time from the change in its price. The purpose of trading is to take advantage of short-term price movements that can be from a few seconds to a few weeks or months.

Difference between trading and investing 

In investing, people hold shares for a long time (5-10 years) so that they can benefit from the growth of the company. On the other hand, the purpose of trading is to earn profit quickly. In this, the return comes quickly, but the risk is also high.

Role of trading in India's stock market :

India has two major stock exchanges NSE (National Stock Exchange) and BSE (Bombay Stock Exchange). There is a turnover of about ? 1.5 lakh crore every day on NSE alone (Data: April–June 2025 quarter, Source: NSE). A large part of this comes from intraday and derivatives trading.

Today, trading has become much easier thanks to digital trading platforms and discount brokers, but to be successful, it is most important that you first understand how many types of trading there are, and which trading type will be most suitable for you.

Top 10 Types of Trading in Stock Market

Each trading style requires a different strategy and mindset. This table will help you understand which trading style comes with what activity, time, and risk level.

1. Intraday Trading : 

Intraday trading, a stock has to be bought and sold within the same trading day. The purpose of making profit in this is to catch very small price movements. This trading requires fast decision, strong technical analysis and the ability to understand the momentum of the market. In India, millions of people do intraday trading daily on exchanges like NSE and BSE, especially because brokerage companies charge low fees for it. This style is known for both high risk and high reward. Most successful intraday traders rely on proper risk management, chart patterns and volume analysis. Beginners should start with practice and paper trading as there is also a risk of losing capital quickly.

2. Swing Trading :

In swing trading, the trade is held for a few days to a week or two. In this, traders take entry and exit using indicators like short-term trends, technical breakouts, and moving averages. This trading is better for those who cannot sit in front of the screen full-time, such as working professionals or part-time traders. The risk level is medium and stable returns can be obtained with the right strategy. Traders often keep losses under control by using stop losses. Swing trading is becoming increasingly popular in India as it avoids daily volatility and allows better time management. This trading demands both discipline and patience.

3. Positional Trading : 

In positional trading, a stock is held for a few weeks to several months. This trading is for those traders who want to catch longer trends using both technical and fundamental analysis. In this, the quality of the stock, sector trends and economic conditions are also taken into account. In this trading style, the daily movement of the market does not have much effect, so it is also called low-risk trading. In India, this trading is popular among those who do not want to trade too much in a short period of time but expect good returns. The most important thing in positional trading is patience and the ability to understand the trend.

4. Delivery Trading : 

Delivery trading is a method in which the purchased stock is held for more than a day, that is, it is not sold till the end of the trading day. In this, the stocks are transferred to your Demat account and you can hold them for weeks, months or years. This style is a balanced method between investment and trading. In this, the brokerage charge is low and tax is also less if the holding is for more than 1 year. This trading has become very popular in India due to brokers offering zero brokerage. This trading is especially suitable for those who do not want to take much risk and want to get returns gradually. Emotional stability and patience are very important in this.

5. Scalping : 

Scalping is an ultra-short term trading technique in which trades last for a few seconds or minutes. The aim is to make cumulative profits by making a lot of trades from small price movements. This type of trading requires very fast decision making, high-speed internet, and a low-latency platform. Scalping is mostly done by professional or algo-based traders as it involves a lot of psychological pressure. Scalping is not that common in India but pro-traders do it in volume stocks or index futures. It is a very high risk trading style, but if executed properly, consistency can also give profits

6. Options Trading : 

In options trading, you take the right (not the obligation) to buy or sell a stock or index at a fixed strike price in the future. This trading is based on derivative contracts and involves a number of strategies such as straddle, strangle, spreads, etc. Options today account for the highest trading volume on NSE in India, especially in Bank Nifty and Nifty contracts. Although the potential returns are high, the risk is also high. Options prices decline rapidly (Time Decay), so both timing and strategy are important. This trading style is for those who understand derivatives and can keep an eye on the market regularly.

7. Futures Trading : 

In futures trading, you contract to buy or sell a stock or index at a fixed strike price in the future. It is a high leverage trading tool where you can take large positions with a small capital. In India, this trading mostly happens in Nifty, Bank Nifty and some selected F&O stocks. The risk in futures is very high because even a slight movement in the price can cause huge loss or profit. This trading is better for professionals, fund houses and traders with high capital. New traders should get into it only when they understand proper risk management and margin requirements well. Without the right strategy and stop loss, futures trading can prove to be dangerous.

8. Arbitrage Trading : 

Arbitrage trading takes advantage of the price difference of a stock or asset — such as the same stock trading at different prices on different exchanges, or there is a price gap in the futures and cash markets. Using this gap, traders earn risk-free or low-risk profits. Arbitrage trading is mostly done by institutional traders or large funds because it requires high capital and fast action. Some mutual funds in India adopt such strategies through "arbitrage funds". Although this trading style does not give very high profits, its risk is very low. Technology, timing and execution speed are very important in this.

9. Momentum Trading : 

The purpose of momentum trading is to catch a stock or index that is in a trend - that is, which is moving up or down rapidly. In this, traders trade in the direction of ups or downs using high volume, breakout levels and technical indicators like RSI. In India, this trading is very popular in Bank Nifty, Nifty and Midcap stocks, especially in volatile market conditions. This is a short term trading style, which can last from a few hours to a few days. Discipline and timing are very important in this because wrong entry or late exit can cause huge losses. This trading is better for those who understand the charts and can take quick decisions.

10. Algorithmic Trading : 

In algo trading, trades are done automatically, not by humans, but by pre-made programs and algorithms. These algorithms scan market data and execute trades on set conditions. Algo trading is gaining popularity in India, especially with the help of a few platforms. This trading is disciplined, there are no emotions and the speed is very fast. However, to do this, it is necessary to have an understanding of programming and market logic. Algo trading was earlier done at the institutional level, but now individual traders are also adopting it. With the right backtesting and risk setup, this trading can prove to be very efficient.

Which Type of Trading is Best for Beginners?

When someone first enters the world of the stock market, the biggest question is “Where to start?” With so much information, YouTube videos, social media tips and blogs around the market, new traders often get confused. But the reality is that no one trading style is “right for everyone”. It depends on your own personal profile such as

• How much time you have

• How much capital you have

• How much risk you can take

• And most importantly, how disciplined you are.

The market is not just a place to make profits, it is a system that tests your patience, willingness to learn and emotional control every day. Many people are initially attracted to intraday trading because of the potential to “make money fast”. But the mental stress, screen time and quick decision-making that goes into it are not something everyone can handle.

At the same time, some people choose swing or delivery trading because it gives flexibility of time and also provides enough space for learning. In this, you can understand the market movement better with low risk and stable returns.

Conclusion

There is no one right way to trade in the stock market. Every trading style be it intraday, swing, options or positional can be beneficial in its own way, if you adopt it with understanding, discipline and the right strategy. It is important for new traders to first understand themselves, read the market and then move forward slowly. Profit is a process, which is made with time, experience and patience.

FAQs 

Q1. What are the main types of trading in the stock market?

There are mainly many trading styles in the stock market like intraday, swing, positional, options, futures and algo trading.

Q2. Which type of trading is best for beginners?

Swing or delivery trading is considered better for beginners, as the risk is relatively less and there is time to learn.

Q3. Which type of trading is the most profitable?

The trading that you understand well gives the most profit. Options or intraday have more possibilities, but also more risk.

Q4. How many types of trading are there in India?

There are at least 10 major trading styles prevalent in India, some of which are active (e.g. intraday) and some strategic (eg algo, arbitrage).

Q5. Which trading type has the lowest risk?

Delivery or positional trading usually has less risk, as stocks are held for a long period and there is protection from market fluctuations.