The stock market is constantly changing, both nationally and worldwide, making it an important part of our economy today. Because of its mass influence and potential to make money, the stock market sees new traders and investors every day, making it nearly impossible to predict its future movements. As a result of its continuous evolution, professionals in the trading industry are using a wide variety of strategies that best fit their interests and financial status. Those who are interested in investing in the stock market should get a strong understanding of these four common trading strategies.
Known as one of the fastest moving strategies, day trading refers to and purchase and sale of a given stock, typically within the same business day. Because of its quick timeframe, day trading is often considered one of the most active types of trading. Day traders typically gain profits by avoiding significant value curves that would otherwise have an impact. Traders will either purchase stocks based on their knowledge, or with the assistance from one of many apps that provide statistics.
Position trading takes a different approach by acquiring and applying data on stock market trends to their investment. Position traders will look for a trend that is gaining traction and invest in its respective stocks. While position trading professionals can move quickly in this strategy, more of the investments are considered long-term. Position traders are not typically affected by fluctuations in the same way that active trading does.
With swing trading, the strategy is to buy or sell a given stock after the decline of a trend, when new trends also set in. When the two factors are combined, it can create a more volatile market, meaning that both stock prices are more vulnerable. Prices that are more vulnerable can lead to significant profits as a result. While swing trading is a great strategy, it requires a strong understanding of how to predict market trend shifts, to reduce your own risk.
Known as one of the most popular strategies, traders who use the scalping approach by finding stocks with a price gap between its selling price and asking price. Once they have found a gap, traders will purchase at the selling price, before turning around and selling it for the original asking price. This can provide profits through price gaps. Like the other forms of active trading, scalping does require dedicated time to monitoring the stock market.
About The Author
Kyle Dennis is a Professional Trader and Educator at Raging Bull Trading, a trading program designed to help both new and experienced traders master the stock market. Kyle originally joined Raging Bull Trading as a new student looking to master his skills. Through Raging Bull’s Millionaire Roadmap program, Kyle became the first student in its history to make $1 million in trading profits. Following his success, Kyle Dennis joined Raging Bull Trading as a trader and educator. He offers his specialized program, Biotech Breakouts, through Raging Bull, and is focused on mastering biotech stock trading.