Where investments are typically held for a period of years or even decades, traders buy and sell stocks, commodities, currency pairs and various other investment vehicles with the intention of generating returns that outperform a buy-and-hold strategy.
Trading profits are viewed as income since profits are “taken off the table” on a regular basis (as opposed to investing, where positions are generally left alone for the long haul).
Trading profits are achieved through buying low and selling high - and selling high and buying (to cover) low, in the case of short selling - and all trades are entered and exited within a relatively short period of time.
This time period can vary from a few seconds to months or even years, depending on the trader’s style. The following chart lists the four primary trading styles - position, swing, day and scalp - with the corresponding time frames and holding periods for each.
Type of Trades
Time FrameHolding Period
Position TradingLong TermMonths to years
Swing TradingShort TermDays to weeks
Day TradingShort termDay only - no overnight positions
Scalp TradingVery short termSeconds to minutes - no overnight positions
Read Article: An informative article explaining the main types of investment trades.