If you are going to be successful in stock trading, you need to figure out which trading strategy best suits you. This means taking into account your needs and resources, your expectations for return, and your tolerance for risk.

Age may affect the type of strategy that you should choose for stock trading. We will discuss many of the strategies that are used in today’s market.

Day Trading - A day trader is someone who buys and sells during the day (intraday) and may have a high volume of trading throughout the day. Advantages? No overnight hold exposures, capitalizing on both longs and shorts throughout the day.

You may reduce your risk of losing money by focusing on a greater percentage of winning trades by accepting faster profits. These profits are smaller due to the smaller risk. This strategy also has it downsides. It requires a lot of effort, time, and work. You must always be giving the market your attention during trading hours. The cost may be higher as you will be trading stocks at a high rate.

Swing Trading - A swing trader takes more calculated risks, making larger trades and holding them throughout the day, up to several days or weeks. This yields fewer commissions because of a slower cycle of trading, but there is a smaller margin of error because of the decreased frequency of trades. It can be more profitable with several days’ worth of profits as opposed to profits accumulated within a single day.

Many traders prefer to trade over a longer timeframe. If you are a person who is considering this type of trade, you should know that your risk per trade will be higher. This risk occurs due to the retreats that are subject to happen in all stock and future trading in the market. Be ready to have overnight exposure as you will be subject to major changes or events.

Long-Term Swing Trading - If you take this approach, you are basically following the same strategy as the swing trader described above, except that you hold the stocks longer. Trades are usually made over a period of months. You can use this approach to trading when focusing on stock indexes and mutual funds, or through technical and fundamental analysis of individual stocks.

The advantage to taking a longer-term approach is that you avoid being distracted by noise in the data, which occurs in all markets. Small fluctuations are less important because you are looking at longer-term trends, though you cannot ignore them entirely. Again, the longer you are holding the position, the greater the profit percentage you need to shoot for. In the case of long-term swing trading, you may want to set a profit target much higher than those found in day trading. The disadvantage to this approach is that you are not well positioned to capitalize on any short-term movements in the market, and your risk may grow with the amount of time the stock is held.

Buy and Hold Trading - In this approach, you hold stocks for years at a time. If you choose them correctly, you can make a good profit with very little cost or effort beyond the initial selection of the stocks. Unfortunately, in many cases this approach is more aptly named the “buy and forget” strategy.

Many investors who hold stocks for a long period of time are not actively carrying out a long-term trading strategy, but just picking up stocks and holding on to them for no particularly good reason. It may generally be better, even if you plan on holding on to a stock for a long time, to approach trading as a long-term swing trader. That way, if the stock does become less attractive over time, you are positioned to minimize your losses and maximize your gains. Go into the market with clear goals, and you will be better prepared.