Insight Stock Picks classifies trading strategies into five basic types: daytrading, short-term swing trading, long-term swing trading, position trading and long term investing. The major difference between these five trading strategies is the holding period (the length of time between buying and selling the stock). The holding period can be as little as a minute and can exceed several years.
Daytrading
The purchase and sale of the same stock on the same day. This form of trading is generally done by scalpers, traders who seek to make a quick profit and exit the trade before the price of the stock moves against them. They attempt to capture many small gains throughout the day
Short Term Swing Trading
The purchase of a stock to be held for a short period of time, usually 1-10 days. The short term swing trader hopes to capture profits by buying near the beginning of a short term trend and selling near the end of a short term trend.
Long Term Swing Trading
The purchase of a stock to be held for a short period of time, usually up to 30 days. The long term swing trader hopes to capture profits by buying near the beginning of a short term trend and selling near the end of a short term trend. This is the same as short term swing trading but with a somewhat longer holding period and a larger profit target.
Position Trading
Position traders buy stock with the expectation of holding the stock in terms of months. Generally they hold the stock from 1 month to 12 months.
They attempt to capture long term trends in price and have a higher profit expectancy per trade than swing traders.
Long Term Investing
The purchase of a stock with the intention of holding the stock long term, usually for periods in terms of years. Holding periods are from 1 year to a lifetime.