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.

Quicker, smaller profits can result from a higher percentage of winning trades, thus reducing risk. Reality check: This type of trading requires vigilance. You must pay attention to the market during the day. This strategy can prove costly when making frequent trades because of transacion costs.

Swing Trading – Instead of day trading, you can hold your position in the market longer, for days or weeks, and look for opportunities to make larger profits. This type of trading is called swing trading. Because you are making fewer trades, you don’t incur as many commission charges. The profits can be larger and you are less likely to be pressured into making a mistake.

Opportunities for swing trading can often be found using technical analysis. Typically, the aim is for a higher profit margin than that of day trading. Of course, this also means a higher potential level of risk per trade.

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.

Of course, the longer timeframe equates to a higher risk, certainly with stocks that are more volatile. This type of trading also misses out on profiting from the short-term swings of the market.

A buyer who uses Buy and Hold Trading generally don’t have a long-term trading goal, except to gather stocks that they will cling to. For this reason, it is best for the buy and hold buyer to begin contemplating a strategy that is similar to the long-term swing trader. This will help you define your objectives and what to expect if the market does not go your way.