Highlights

BASICS OF TRADING

Author: EllaTaylor   |   Latest post: Wed, 29 Jun 2022, 1:58 AM

 

TYPES OF TRADING

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SCALPING
 
Scalping (like micro-trading) is about making very little profit, over and over again. Usually trades last from seconds to minutes. Scalping is a trading strategy that seeks to take advantage of small price fluctuations. Traders who implement this strategy will make anywhere from 10 to several hundred trades a day, believing that small stock price movements are easier to obtain than large ones. .
 
Scalping is a professional skill, and although many people find this idea attractive (and exciting for adrenaline lovers), I would not recommend it to beginners. 
 
DAY TRADING
 
Day trading is about buying and selling on the same day, without holding a position overnight. Compared to scalping, this style requires holding positions for minutes to hours, not seconds to minutes. The daily trade closes all trades before the market closes. Most day traders use leverage to maximize returns from small price movements.
 
Day trading has always been advertised as a quick way to get rich quick. However, this rarely happens. Day traders often suffer large financial losses in the first months of trading and many do not study in a profitable position. Day traders lack spreads between offers and demands, trading commissions and other costs. These costs require day traders to make a big profit from trading, just to break the down payment.
 
 
MOMENTUM TRADING
 
 
When trading momentum, the trader identifies a stock that is "broken" and jumps to gain as much dynamism up or down as possible. They focus on stocks moving in one direction in large volumes. A typical time frame for momentum trading is a few hours to a few days, depending on how fast the stock is moving and when it changes direction.
 
 
SWING TRADING
 
Swing is the art of capturing short-term trends. This is a trading style that seeks to make money on stocks in one to seven days. Swing traders use technical analysis to find stocks with short-term price momentum. These traders are not interested in the fundamentals or intrinsic value of stocks, but in their price trends and formulas.
 
In my opinion, swing trading and positional trading are the only two types of trading where a full-time person can still trade part-time. Due to the fact that the holding period is several days, the intraday movement does not affect the swing trader as a daily trader. The average holding time of a swing shop is three to seven days.
 
 
POSITION TRADING
 
Position traders stay in trading for weeks to months. A position trader tries to predict whether the current trend will continue as a momentary or swing trade in the longer term. Position trading gives traders who cannot sell regularly a lot of freedom: the profit potential does not decrease and position traders can earn a lot. Long-term traders are not afraid of short-term fluctuations, because they believe that their long-term investment horizons may slip. Position trading is the opposite of daily trading, as the goal is to use the main trend movement instead of the short changes that occur on a daily basis.

 

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