The trading strategy greatly depends on the trader’s mentality. Those who are using a readymade trading system is not going to survive in the investment business. You need to know your mentality and based on your mindset, you must create a trading model. For instance, if you prefer to trade the lower time frame, you must choose a scalping strategy. If you use a long term trading method, you will get bored and break the rules. Though there are many ways of taking the trades, we are going to highlight the most prominent way used to trade the stock market. Note that, scalping is not a prominent trading strategy among the professional stock trader.
Swing trading method
You must learn to identify the major swings in the market. By trading the major swings, you will be able to execute the trade with a high level of accuracy. In fact, this will help you to find the tops and bottoms of the trend. But if you carefully asses the system associated with swing trading method, you will notice it is nothing but using the different phases on the trend in the bigger time frames. Being a swing trader, you need to focus on the trend as it can reduce the risk in trading to a great extent.
Position trading method
The position trading method is the most popular method among the professional stock traders. After buying the stock of a certain company, traders hold on to the trade for moths. At times, they might hold onto trades for years. Though it will be hard for novice traders to use the position trading method it is by far one of the most effective ways by which a trader can make some serious profit. When you learn the position trading method, use the best trading platform to analyze the major stocks. By choosing a faulty trading platform, you will get used to weak trading tools and never know what it feels like to trade in the professional platform like that offered by Saxo.
Trend trading method
Those who can’t afford to use the position trading method can rely on the trend trading method. You can book the profit in a few days or weeks while taking the trades in favor of the trend. Being a trend trader, you must carefully asses the fundamental news prior to the execution of any trade. The trend is not permanent in any stock. It might change without giving any technical sign. The changes are the result of a major economic announcement. So, if you can keep yourself tuned with the major economic news, you can expect to avoid taking the trades during the potential reversal phase.
Day trading
Some of the advanced stock traders often day trade the market. Day trading is a very tough task as you must have strong analytical skills. Taking trades based on the technical data is not enough to day trade the major stock market. You have to take advantage of the low, medium, and high impact news. Once you start taking the trades with the news along with the technical analysis, you can see a significant boost in your trading performance. Being a day trader, you might have some serious loss but it is very normal. As long as you trade with a low leverage trading account, you can recover the loss and change your life. Never think you won’t lose any trade since you have the best trading model.
Stick to the core rules of money management is the secret to become a professional trader. If you want to change your life, make sure you stick to the core rules of money management and follow the safety protocols. This will help you to make significant progress in your life and make you a better trader in the stock trading business.
Disclaimer: This content does not necessarily represent the views of IWB.