If you want to earn more money in the stock market, it’s helpful to determine if you’re a certain kind of trade and your trading style. You have probably examined stock graphs and recognized upward or downward trends.
However, you may not come to the same conclusion if you look at a chart for a different time frame. A stock’s daily and monthly graphs can reveal entirely different trends.
Some short-term trading styles are swing trade, scalper and fade.
Read below and learn some trading strategy about them, because choosing trading style could be a bit difficult.
Trading Style – Short-Term Trading
To discover what is your business trading style, think about the market time frame that you prioritize. If you try to make money by rapidly buying and selling different stocks, you might be a “scalper”. These traders pay attention to minor changes in value.
Scalper purchase stocks and resell them after very small price increases. They also use the “fade” technique. When stock values suddenly rise, they short sell securities that seem overvalued. This strategy benefits scalpers if other traders decide to make money by selling off a stock: its value falls and the short sale produces a profit.
The problem with this method is that it involves considerable stress. Most jobs become stressful at times, but scalping puts you under heavy pressure throughout the day!
Day traders take a slightly more relaxed approach in their trading style quantum. If you closely watch the intraday stock charts and rarely hold shares for more than eight hours, you may fall into this category.
These traders usually make the most money when their stocks trend upward for several hours. They carefully monitor prices throughout the day.
Trading style – Long-Term Trading
Most stockholders fit the description of a “swing trader“. You may be among them if you normally keep stocks for two to 15 days at a time. Swing trader doesn’t try to earn dividends, but he or she has the patience to wait for gradual price increases.
If you prefer to hold securities for several weeks or months, you could be a “position trader.” These shareholders set aside substantial amounts of money for investment purposes.
They plan ahead by analyzing monthly or yearly performance data.
Position traders devote relatively little time to buying, selling and watching specific stocks. This is a popular trading style.
The last major kind of trading style is an investor. If you fit in this category, you probably favor stocks that pay dividends. This means that you receive a small portion of the company’s profits.
You want your holdings to gain value, but it isn’t important if prices drop for a few days or weeks. Most investors possess enough funds to make a variety of large investments. They try to purchase stocks that will perform well for many years.
Although it requires patience and in-depth research, this strategy often reduces the financial risks of stock trading. It also involves comparatively little stress.
Make sure you pick the right day trading style!
Be carefull, trading forex is also a bit different than the other ones.