Trading Strategies

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StrategiesStrategies

Trading Strategies for Playing the StockTrading Strategies for Playing the Stock
MarketMarket

Trading strategies discussed in this articleTrading strategies discussed in this article
include swing trading and day trading.include swing trading and day trading.

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Both are very similar but the main differenceBoth are very similar but the main difference
between theses two strategies is the timebetween theses two strategies is the time
frame in which stocks are bought andframe in which stocks are bought and
held.held.

In today’s article we will discuss both ofIn today’s article we will discuss both of
these strategies as well as the advantagesthese strategies as well as the advantages
and disadvantages of each.and disadvantages of each.

Swing trading typically involves a smallerSwing trading typically involves a smaller
position size than when day trading stockposition size than when day trading stock
online.online.

Additionally, swing traders will typically holdAdditionally, swing traders will typically hold
onto stocks for a few days to severalonto stocks for a few days to several
weeks and then trade the stock on theweeks and then trade the stock on the
basis of its intra-week or intra-monthbasis of its intra-week or intra-month
movements.movements.

Stop loss orders are placed wider than whenStop loss orders are placed wider than when
day trading as well.day trading as well.

When determining exits when swing tradingWhen determining exits when swing trading
there are rules that every trader shouldthere are rules that every trader should
follow.follow.

It is very important that the trading strategiesIt is very important that the trading strategies
as well as the trading rules are understoodas well as the trading rules are understood
before placing trades in this fashion.before placing trades in this fashion.

For instance, if the prior day’s low is takenFor instance, if the prior day’s low is taken
out on the breakout day, or the high forout on the breakout day, or the high for
shorts, then the trader should exit theshorts, then the trader should exit the
trade.trade.

Also, once a trade is held overnight, a stopAlso, once a trade is held overnight, a stop
loss order should be placed no furtherloss order should be placed no further
away than below the recent consolidationaway than below the recent consolidation
area.area.

A move beneath it would indicate a failure.A move beneath it would indicate a failure.

Swing trading stocks has its advantages andSwing trading stocks has its advantages and
disadvantages as all trading strategies do.disadvantages as all trading strategies do.

Some advantages include that swing tradersSome advantages include that swing traders
can place fewer trades, therefore requiringcan place fewer trades, therefore requiring
fewer commissions and less chance offewer commissions and less chance of
making a mistake.making a mistake.

Additionally this type of stock tradingAdditionally this type of stock trading
provides the ability for successful tradersprovides the ability for successful traders
to catch more significant multi-dayto catch more significant multi-day
profitable traders.profitable traders.

A disadvantage to swing trading is the factA disadvantage to swing trading is the fact
that the higher profit targets come withthat the higher profit targets come with
higher risk per trade.higher risk per trade.

There is also overnight exposure that cannotThere is also overnight exposure that cannot
be predicted.be predicted.

Day trading stocks requires a largerDay trading stocks requires a larger
positions size since you are looking for apositions size since you are looking for a
smaller move within a short time frame.smaller move within a short time frame.

Unlike swing traders, a day trader may tradeUnlike swing traders, a day trader may trade
a few times per day or more! There area few times per day or more! There are
also rules with day trading that everyalso rules with day trading that every
investor should follow.investor should follow.

For instance, they should always keep theirFor instance, they should always keep their
profit objective at least 3 times greaterprofit objective at least 3 times greater
than what they are willing to risk.than what they are willing to risk.

Also, day traders should allow no more thanAlso, day traders should allow no more than
1% move against them from the entry1% move against them from the entry
point.point.

There are many more trading strategies andThere are many more trading strategies and
rules when day trading that investorsrules when day trading that investors
should learn in addition to these two rules.should learn in addition to these two rules.

Day trading also has its advantages andDay trading also has its advantages and
disadvantages as well.disadvantages as well.

When day trading there is no overnight holdWhen day trading there is no overnight hold
exposure and investors can profit fromexposure and investors can profit from
both long and short and take advantage ofboth long and short and take advantage of
quick swings in both directions.quick swings in both directions.

There is also a higher percentage of winningThere is also a higher percentage of winning
trades when taking quicker profits andtrades when taking quicker profits and
smaller investment risk.smaller investment risk.

The disadvantages to this type of tradingThe disadvantages to this type of trading
can be the trading costs which tend to becan be the trading costs which tend to be
high when trading as frequently as you dohigh when trading as frequently as you do
when day trading.when day trading.

Also this investment strategy requiresAlso this investment strategy requires
constant attention to the markets and a lotconstant attention to the markets and a lot
of effort.of effort.

Both trading strategies are a great way toBoth trading strategies are a great way to
make money in the stock market.make money in the stock market.

Continue to research them both as well asContinue to research them both as well as
other strategies and find one that worksother strategies and find one that works
for you.for you.

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