Equity trading is a versatile space that offers opportunities for different styles of traders — from those looking for quick, intraday gains to those willing to hold trades for several days or weeks. While the objective remains the same — to profit from stock price movements — the methodology, timeframe, and risk appetite vary significantly.
The two central themes in equity trading are:
Trend: Riding directional price movements in the market
Inefficiency: Capitalizing on temporary price mismatches or mispricings
Key Types of Equity Trading
1. Intraday Trading (Day Trading)
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Trades are opened and closed within the same trading day
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Requires high discipline and technical analysis
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Leverages lower margins from brokers due to same-day square-off
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Can be long (buy low, sell high) or short (sell high, buy low)
Example: Buying Reliance shares at ₹2,500 and selling at ₹2,540 within the same day.
2. Swing Trading
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Trades last from a few days to a few weeks
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Based on short-term technical patterns (e.g., moving averages, breakouts)
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Less stressful than intraday and offers time for decision-making
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News-based or earnings-driven movements often used for timing trades
Example: Buying a stock ahead of its quarterly results in anticipation of positive momentum.
3. Positional Trading
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Trades are held from a few weeks to a few months
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Combines technical analysis with basic fundamental triggers
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Requires patience and larger capital but has lower volatility stress
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Best for traders who can’t monitor markets continuously
4. Price Action Trading
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Based entirely on real-time price movements and volume
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Avoids indicators and instead focuses on support, resistance, and candlestick patterns
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Often influenced by news, earnings announcements, or macro data
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Risky due to unpredictability and requires deep market intuition
5. Scalping (Ultra Short-Term Trading)
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Involves making multiple trades per day to earn small profits
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Profits come from tiny price differences, traded in large volumes
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Requires speed, precision, and very low brokerage/slippage
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Common in highly liquid stocks like Nifty 50 components
6. Arbitrage Trading
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Focuses on price discrepancies between different instruments
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In India, most arbitrage happens between:
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Cash and Futures market (Cash-F&O arbitrage)
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Index and constituent stocks (Index arbitrage)
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Low-risk but capital-intensive strategy
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Acts almost like a fixed-income product for conservative traders
7. Event-Driven Trading
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Based on anticipated corporate or macroeconomic events
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Examples include budget announcements, RBI policy, mergers, IPOs, or earnings reports
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Involves short-term positioning before or after the event
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Highly volatile but can offer strong one-time returns
3 Common Trading Philosophies
Depending on how they interpret and react to market data, equity traders in India often fall into one of these strategic mindsets:
1. Trend Traders
Believe in “the trend is your friend”
Use indicators like moving averages, RSI, MACD to confirm momentum
Prefer trading with market direction to reduce risk and increase success rate
2. Contrarian Traders
Go against prevailing market sentiment
Believe markets overreact to certain data or events
Look for reversal patterns and mispriced opportunities
High-risk, high-reward — works best when markets are irrational
3. Range-Bound Traders
Trade stocks within a defined price range (support and resistance)
Use technical tools like Bollinger Bands, pivot points
Focus on risk-reward setups, buying at support and selling at resistance
Avoids trades during breakouts or trending phases
Final Thoughts
The Indian equity market offers an expansive playing field for all kinds of traders — from risk-takers to conservative strategists. Your choice of trading type should be aligned with:
Your risk tolerance
Time availability
Capital base
Experience level
While no one method guarantees success, understanding these trading styles and experimenting with what works best for you will go a long way in your trading journey.
