The world of stock trading is quite the roller coaster, but that’s what it’s all about, isn’t it? After all, the anticipation that precedes a successful trade is quite priceless, only figuratively of course. That being said, if you are a true entrepreneur, you must be looking for more than just the anticipation. You must be after the trading strategies, the steady profits, and the sustainable portfolio expansion. If a true entrepreneur is who you consider yourself, then this list is for you. Here are four of the most popular and effective trading strategies out there.
Position Trading
This trading strategy is all about the long-term course of action. How do you carry out this strategy? By holding your position for a long amount of time – months and even years. While it sounds simple, there is a lot more that goes into that. First, you need to have an extensive amount of knowledge about the current market you’re trading in, as well as, the stocks you’re holding on to. It’s this knowledge that will tell you when to sell and when to stay. Second, you need to have sufficient self-confidence and risk-taking ability to hold onto a stock even when the short-term market doesn’t seem promising. When you combine both qualities, you’ll be able to see through the minimal short-term spikes and slumps and get to the significant and sustainable winnings that come with long-term growth.
Day Trading
It’s considered an active trading strategy that focuses on short-term market fluctuations. As opposed to position traders, day traders never hold on to a position for more than a day, not even overnight. In order to win big through this technique, a great deal of expertise and knowledge is needed since it takes superior instincts to know what will bring you the most profit at the end of your day. That’s why the strategy is often adopted by expert traders. However, according to this detailed review, it seems that online trading platforms are making it easier for the up-and-comers to hone their day trading skills. Whether you’re a veteran or an amateur trader, try to keep your wits about you while trading, rather than your emotions.
Trend Trading
Trend philosophy revolves around predicting the future through an asset’s present and past performance. A trend trader keeps their eye on market trends, what’s going up and what’s going down, and that’s how they decide what to buy and what to sell. In other words, they assume that a stock increasing in value will continue to increase in value, and vice versa. At first, it seems quite dull to believe that a trend will continue to go on forever, but when you understand how it’s applied, everything will make sense. Trend traders do rely on trends but to a certain extent. While they use trends to dictate their decisions, they spend a lot of time analyzing trends and predicting possible trend shifts. All in all, they are quite quick on their feet.
Swing Trading
This technique depends on going after the small gains. While other traders aim for higher profit percentages, swing traders aim for much lower, but it’s not because they’re underachievers. In fact, their trading style is pin-point accurate because, through a series of small, quick, and successful trades, they manage to get the most out of sudden peaks and dips. Usually, this happens after a period of trend stability. When the trend breaks and the prices change, that’s when swing traders rise to action. In a sense, they also keep an eye out for trends, but instead of hoping for stability, they root for chaos. As for how long a position is held, swing traders usually operate on much shorter rates than long-term traders, but they’re not as diligent as day traders in changing positions.
To get the most out of the trading strategies, take the time to familiarize yourself with each of them by researching each one in-depth. Not every strategy will work for you the same which is why it’s better if you try them out on a trading simulator while noting the outcome. That way, you’ll be able to not only figure out which strategies suit you best but also hone your skills before you start applying the techniques in your day-to-day trades. Last but not least, if you haven’t already, make sure you separate your money into two funds. Your long-term funds and your risk fund. Because a big part of stock trading is about taking risks, you should keep some money around for just that, but keep it to a specific amount to limit your losses.
