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Stock Market Trading – Types of Trading and Its History

Updated on :  

08 min read.

A stock market facilitates the buying, selling, and issuance of stocks of publicly held companies. The exchanges on the stock market can be carried out physically or electronically. There are two categories of the stock market – a) the Organised Market and b) the Unorganised Market. An organised market operates as per rules and regulations, whereas an unorganised market works independently, free of any restrictions.

The history of share market trading in India

The first share market in India started its operations in 1875! The first share trading association was named ‘Native Share and Stock Broker’s Association’. The name was later changed to ‘Bombay Stock Exchange’ or ‘BSE’ as we know it. BSE had 318 members trading on it during its first year of operation. The other main share market in India, ‘National Stock Exchange’ or ‘NSE’, was founded in 1992, recognised by SEBI in 1993 for trading and began its operations in 1994. Today, India has 24 share markets operating in different parts. Here’s the list of stock exchanges in India:

Name of the stock exchangeRecognition valid upto
Bombay Stock ExchangePERMANENT
Calcutta Stock ExchangePERMANENT
Indian Commodity Exchange LimitedPERMANENT
Metropolitan Stock Exchange of India Limited15th September, 2022
Multi Commodity Exchange of India LimitedPERMANENT
National Commodity and Derivatives Exchange Limited PERMANENT
National Stock ExchangePERMANENT

The different types of trading in the stock market

Day Trading: In day trading, stocks are traded within the day. Buying and selling of stocks last for a few minutes or hours. If you’re a trader who has participated in day trading, you would have to sell the stock bought before the share market closes for the day. Traders who have expert knowledge of the stock market are usually the majority of participants.

Scalping: In scalping, the frequency of trades in the share market ranges from a dozen to even a hundred! The idea of a trader when scalping is to make small but significant profits during the day. The shares are only held for a few minutes. Although traders use scalping to earn more profits, this trading method does not always work. Sometimes, the losses exceed the gains. Like day trading, scalping also requires expert market knowledge and know-how. 

Swing Trading: In swing trading, traders buy and sell stocks in the share market within a one to seven-day period. Making profits via swing trading requires a complete technical analysis of the potential stock to be invested in. 

Momentum Trading: In momentum trading, traders try to make profits in the share market by riding the momentum of the stocks. When a stock is on an upward momentum, the idea is to sell it so that you can get better than average returns. When a stock is on a downward momentum, the idea is to buy it in bulk and sell it later when the price is on an upward trajectory. 

Position Trading: In position trading, traders hold on to securities for a longer term. This type of trading is ideal if you’re not a regular trader of shares in the stock market.

Conclusion

With the advent of the internet, it has become possible for traders to trade from anywhere in the country on NSE and BSE. With more options than ever available in the market to trade, traders now have more possibility of making profits than before.