Candlestick Trading Blog
August 5, 2008
Stock Market Trading Strategies
4 Stock Market Trading Strategies Today’s article will take a look at four stock market trading strategies practiced by investors. There are numerous ways to invest in the stock market and many investors incorporate one to a few different investment strategies into their trading lives. We will take a quick look at four strategies including day trading, swing trading, buy and hold strategy, and initial public offerings (IPOs). Read about each strategy and decide which are of interest to you. Day trading relies on the study of technical analysis. The purpose of day trading is to buy stock and then sell it within the same trading day. This is one of the four stock market trading strategies that require four important steps for success. First you must find prospective stocks to trade, which requires the use of stock charts and the ability to detect patterns that indicate what is occurring in the markets. Day traders must also know how to calculate spreads, or in other words, figure out how a particular stock can make a profit. Third, the trader must be able to determine when to buy shares, or in stock market terms, take the position. Timing is everything when it comes to day trading, so understanding when to buy and sell stock is the key. Lastly, the trader must be able to determine when to sell the position, or in other words, sell the stock. Some day traders will place a stop loss order to assist them with this concept. Swing trading is similar to day trading however swing traders can buy and hold stock for a few days to a couple of months. This is one of the stock market trading strategies that also require the use of technical analysis tools. Swing traders also utilize stockcharts to analyze price movements in order to obtain a profit. Buying and holding is a long term investing strategy where an investor will buy and hold stock for at least one year or more, and then sell it to make a profit. Investors do not use fundamental and technical analysis for this strategy. The purpose behind this type of trading is to take advantage of the long term capital gains tax. IPOs are initial public offerings and the purpose behind them is to raise capital for expanding a company. It occurs when a privately held company decides to raise extra funds by going public. Some experienced investors will invest in these companies with the hopes that these new public companies stock will increase in price. This is a very risky way to invest and is only typically done by more experienced investors. There are other stock market trading strategies in addition to the four described above. For new investors, the most important step is to find a strategy that suits you. It must be one that matches your personality and that works with your daily schedule, and a strategy that you can accommodate financially. Trading stocks is a very popular way to make additional money however it requires extensive knowledge and research. There are many investors who successfully trade everyday full time. These investors understand the hard work, dedication, patience, and focus that go into studying the markets. Continue to research different stock trading strategies and find one that works for you. Online Stock Market Reviews presented live via the internet by Stephen Bigalow |
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