Keys to Short-term Trading
Keys to Short-term Trading
When it comes to successful short-term trading, trading strategies prove paramount. The best stock trading tips in the world won’t amount to much if the trader doesn’t have a strong strategy in place. SureTrader provides you with all the tools necessary to master short-term trading and start day trading regularly.
Fundamentals of Short-Term Trading
Understanding the fundamentals of short-term trading is the key to long-term success. Unlike longer-term trading, such fundamentals aren’t concerned with stock investment tips, because the day trader is not investing per se. There is no need to concern yourself with a company’s financials, for example, because you are interested only in what the stock does today, not years down the road. The day trader’s fundamentals consist of learning to read charts, investigating patterns and protecting themselves from extreme volatility.
Controlling Risk – Sell Stops and Buy Stops
Day trading is risky, but savvy traders soon learn to minimize risk by using sell stops and buy stops. Set a sell stop to sell the security once it hits a predetermined price. At that point, it becomes a sell order at market price. The opposite is the buy stop. Set a buy stop for a certain price, and when it is reached, it turns into a buy order. By using these techniques, you control how much you might lose in any given transaction.
Technical Analysis – Evaluating and Studying Stocks and Markets
Evaluating short-term stock recommendations requires a firm grasp of technical analysis. This involves the use of indicators, including:
- Moving averages – a stock’s average closing price over a particular period
- Oscillators – these indicators show upward and downward flow. The most used include stochastic, the Relative Speed Index (RSI) and the Moving Average Convergence Divergence (MACD).
- Volume – these indicators measure a price trend’s strength, using price data in conjunction with volume.
There are many, more esoteric indicators available. A day trader should experiment and see which indicators best suit his individual trading style. While indicators are invaluable for market evaluation, it doesn’t make sense to use more than a few indicators when trading. That’s because worthwhile indicators should always send you in similar directions when trading.
Technical Analysis – Patterns
Technical analysis involves recognizing patterns in the market cycle and buying and selling based on these patterns. Traders use chart patterns to make decisions, but while chart patterns are useful they are not infallible. Some of the better- known chart patterns include:
- Head and shoulders-this pattern indicates trend reversal.
- Triangle – these patterns consists of several types, showing potential breakouts and breakdowns.
- Wedges – this pattern indicates bearishness when rising, and bullishness when falling.
Again, there are numerous patterns available in technical analysis, and the trader must decide which ones most complement their individual trading methodology.
The SureTrader Advantage
SureTrader gives novice investors the opportunity to learn short-term investment strategies. Use our simulator while developing strategies and find out which techniques work best for you, before you start actually trading. Daily updates help traders monitor patterns and make more calculated risks. Our state-of-the-art platform, top technical analysis and low fees combine to make the SureTrader the best online brokerage available. That’s the SureTrader advantage.