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4 Trading Strategies Every Trader Should Know

Serious business man trader analyst looking at computer monitor, investor broker analyzing indexes, financial chart trading online investment data on cryptocurrency stock market graph on pc screen.

Becoming a trader can be every bit as intimidating as they make it seem in TV and film, so here are a few strategies that may take some of the pressure off you should you decide to get active in the stock market.

Day Trading

This is for those who are looking at trading as a potential full-time career. You look at the cost of a stock in the morning and see if it will rise throughout the day so you can sell it high. There are fewer overnight risks but learning the basics is key as you could leave yourself open to more flat trades, where the stock doesn’t move at all, or worse, plummeting stock. Being based in Europe actually helps because while the first couple of hours are highly liquid, the afternoon, when both the EU and US markets are both open, is the ideal time to get active and put buy and sell orders in.

News Trading

This method involves knowing what news alerts will affect which markets and knowing how to price accordingly. A good idea of how this operates in practice is the fact that the GBP dropped considerably against the EUR in the wake of the Brexit referendum – to the point that you can tell from the graph charting the price when the exit polls were announced.

While you need to treat each market and piece of news individually, an operational awareness of how financial markets work is key. There are defined entry and exit strategies as a result of using this strategy but be aware of overnight risks that may leave you open to losing out as a result of particular news cycles, especially since the exchanges have open and close times but the news cycle has become 24hr.

End-of-Day Trading

Okay so this is theoretically a lazy strategy because most of the actions of traders who use this methodology appear not to do very much throughout the day. However, the fact is that they study the reporting from the previous few days’ reports to judge on a pattern. An example of this would be if a particular stock drops at the close of trading on a regular basis.

As a result of that drop, an end-of-day trader would be able to predict that drop and be able to price accordingly to ensure that they make the most out of their investment with that sale. There are overnight risks, however, and so creating a stop-loss order is a good idea at a minimum.

Swing Trading

Probably the methodology used by most hobbyist marketers is the swing trading strategy. That’s where you study enough of the market trends in a particular industry, say tech for example, and are able to predict the regular highs and lows of a stock.

Using tech, if you were able to see that stock for a gaming company was going through a dip, you would buy as much stock as you could, wait until the pendulum swung, and sell when the stock was higher. Simple enough, but you will need a wider understanding of how certain trends can highlight a wider market swing.

Published: July 16, 2021
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Jenna Christine

Jenna Christine is a corporate relations specialist with over ten years experience in employee relations and brand development roles. She is a dedicated volunteer within the disability advocacy space, and loves to bake and run marathons.

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