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.
Even things like your age should be considered when you are choosing a trading strategy. In this article, we're going to look at some popular approaches to stock trading that are effective in today's market.
Day Trading - An intraday trader is a person who buys and sells during the day. They make most of their purchases throughout the day. This strategy allows you avoid overnight hold exposures. This gives you the advantage of both longs and shorts during the quick swings that may move up or down throughout the day.
As with all other forms of trading, there are always disadvantages. Day trading is a lot of work; you have to remain vigilant throughout the stock trading day. In addition, since brokers charge a commission on each trade, your gains have to outpace the cost of frequent trading.
Swing Trading - A person who is hoping to make larger trades and string them out over a days or weeks, is called a swing trader. The slower cycle of trades allows for a smaller chance of error, less commission, and the ability to have a greater impact on multi-day profits of swing trading. A swing trader often uses technical analysis to help choose swing trade options that target a greater level of return than the average day trader. However, with greater profit chances comes a higher risk for your trade.
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 - The investor, who prefers to swing trade long term, is similar to the Swing Trader discussed previously. However, this investor usually tries to keep their stocks over weeks and even months or years. Long Term Swing Traders will concentrate on trading the indexes. Also they will time mutual funds and research the fundamental and technical analysis of the stocks that they have purchased.
Long-term Swing Trading - This swing trader is similar to the above, but instead of a days-to-weeks turnaround, this trader is focused on weeks-to-months turnaround. Focus on the indexes, mutual funds timing, and technical and fundamental analysis of stocks is commonly used in this type of trading. These longer turnaround times allow for less 'noise' found in most of the markets. Smaller market movements have less of an affect on this type of trading. The yield of this type of stock trading can be as high.
Buy and Hold Trading - The investor that uses this strategy is often one who buys it and holds onto it for years. This type of trader may use a great deal of fundamental analysis before picking this type of trade and understand market sentiment analysis. The profits can be great with this strategy. It usually has few costs for trading when compared with shorter-term methods.
Buy and Hold Trading also known as Buy and Forget trading. These stocks may be bought and held for years. Using the right approach, this can be a lucrative option.
About the Author:
Uncover useful Technical Analysis tips, tricks, and techniques at Stock Trading Review. Get the inside scoop with our no cost stock trading ebook. Get your copy here http://www.StockTradingReview.com today.
No comments:
Post a Comment