Trading has caught the interest of many youngsters over the past few years. While trading in the stock market has been open for years, the last couple of years has observed a great increase in the number of traders. Millions of young individuals have started trading in the stock market as part of their financial planning. One of the main benefits of trading in the stock market is that it can provide high capital returns and prove to be a lucrative option.
However, to gain returns, it is important for you to use the right strategy. If you are a novice trader, there are a few strategies that you should know. They can help you stay profitable in the market.
Top 5 Smart Trading Strategies That Can Help You
There are hundreds of different strategies that are available on the internet. Exploring your trading options on the internet can be a rabbithole. Especially being a novice, identifying a right strategy from the ocean of information available online can be challenging. Here are the most important 5 strategies that you should know so that you dont incur any losses and stay profitable while you trade in the stock market.
1. Swing Trading
Swing trading typically refers to trading both sides when any movement in the financial market is observed. With swing trading, you can either buy a security or a stock when you suspect that the price is going to increase in the next few days. You can also sell a stock in case you consider the price of that particular stock to crash soon. Make sure to research these stocks beforehand and analyse their trends thoroughly.
This method is a technical approach where you will have to identify trends in areas where the market encounters increasing levels of supply or demand. With swing trading, you can also avoid the increased volatility that comes along with day trading. However, you will be exposed to a certain amount of overnight risk. So, make sure that you perform technical analysis on the stock that you pick in order to avoid risks.
2. Trend Trading
When it comes to trend trading, it is key that you dont have a fixed view of the direction of the market. You should have an accurate system to determine as well as follow trends. So, stay alert and look out for the change in trends so that you can enter the market at the right time.
3. Scalping
Scalping is a strategy wherein you hold on to a trade for a very short amount of time. In return for this decreased amount, the capital that you invest will be marginally high. This strategy makes the most out of small price movements in the market. You would not experience any overnight risks with this strategy and can also avoid high volatility.
4. News Trading
The news carries plenty of information about companies and industries. As a trader, it is important for you to be aware of how the markets operate. Depending on the news, the markets move in different directions. While trading based on news, make sure that you have a clearly defined entry and exit strategy. In volatile markets, this strategy can be beneficial.
5. End-of-Day Trading
End-of-day trading is all about trading near the close of markets. This strategy focuses on the time when the settling or closing of the price gets clear at the end of the day. To successfully follow this strategy, you will have to understand price action and compare the same to the price movements of the previous day. You can also place a stop-loss order if you would like to reduce overnight risks.
In a Nutshell
While there are plenty of trading strategies available, it is important for you to pick the right strategy that suits your trading style. Make sure that you experiment with these 5 different strategies and identify the ones that you are comfortable with. Following a trading strategy can help you stay profitable in the long run. To start your trading journey, it is important for you to have a Demat and a trading account. Make sure that you set up these accounts so that you can begin trading. If you would like to know more about trading and strategies, Stockdork is the place to go.