Stock Market Trading Day
The typical stock market trading day depends on the type of stock trader. There are many different way to trade stock but in today’s article we discuss the typical stock market trading day as it relates to the different types of stock traders.
Technical traders – these traders will spend their stock market trading day reading stock charts and graphs and they look for buy or sell signals. These buy or sell signals are indicated by signs of divergence or convergence on these charts. They study and follow the concepts associated with technical analysis rather than fundamental analysis.
Momentum traders – momentum traders spend their day also reading charts but they look for those stocks that move significantly in one direction on high volume, and their goal is to jump on the bandwagon to ride the momentum to desired profits. They attempt to buy stock at the bottom and sell it at the top.
Day traders – day traders spend their trading day reading stock charts as well and they also follow technical analysis. These traders will hold stocks for a few hours or sometimes for a few seconds and they close out of all trades by the end of their trading day, rarely leaving anything open overnight. The goal of day traders is to get in and then quickly get out by selling out of a certain stock for a profit.
Swing traders – swing traders spend their stock market trading day in a similar fashion as day traders however they hold onto their stocks longer. They don’t close out of all of their trades by the end of the day and they assume greater risk because of this. They do not liquidate their stock like day traders do at the end of the day but like day traders they also attempt to predict future price movements using technical indicators.
Scalpers – scalpers make numerous trades each day within minutes. They quickly buy and sell large volumes of stock during a very short period of time and they do this repeatedly throughout the day. The goal of scalpers is to also earn a small share of profit per transaction with minimum risk through exploiting the bid-ask spread.
There are other types of stock traders as well including those traders that practice fundamental analysis. Those traders that use fundamental analysis are seen more as investors rather than stock traders since they hold onto stock for longer periods of time and they base their investment decisions on the intrinsic value of stock rather than on technicals.
Market Direction: The visual aspects of candlestick signals allow investors to detect bullish sentiment in a stock price, even when the stock price is down. The Belt Hold signal is a powerful signal that gets very little attention. However, it has very simple bullish ramifications. It reveals when sellers have been flushed out of a price trend. It also has highly predictable results. Simple logic dictates that if you get the selling pressure out of the way, the next price movement becomes a strong bullish move, there is no selling to inhibit the uptrend.
The Belt Hold signal revealed itself in many stock prices in Friday's selloff. This provided a supply of strong potential price moves. The commonsense explanation of a Belt Hold signal makes it much easier to understand why it is a strong bullish signal. The markets were met with bad economic news from the Middle East on Friday. What was the initial reaction? Heavy selling on the open, prices gapped down. What is the definition of a bullish Belt Hold signal? A severe gap down in price, followed by buying that brings the price back up towards/into the prevailing trading range of a stock price. The signal indicates massive selling on the open, followed by the Bulls stepping in for the rest of the day.
The visual aspects of a Belt Hold signal is the ultimate for indicating relative strength. As illustrated in the NUAN chart, the sellers were lin full strength on the open on Friday. However, the rest of the day showed the Bulls were still in this position. With the Dow being down 155 points on Friday, the NUAN chart shows good bullish strength in light of those market conditions.
CSIQ became a recommendation for today based upon a belt hold signal and the possible formation of a Jay hook pattern. Understanding the investor sentiment that creates specific signals allows an investor to be prepared for the results attributed to those signals.
This is the purpose of candlestick analysis. Being able to analyze what should be occurring next, based upon the information provided by each signal or pattern. Once you have learned what should occur, your investment capabilities improve dramatically.
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The Candlestick Forum Team