Day trading isn’t for the faint of heart, and you can lose money just as fast as you can make it. This is why you need a good strategy, but don’t worry because we’ve put together a short list of popular day trading strategies. With that said, feel free to give the following a try or find reviews of stock trading:
The Momentum Strategy
This strategy involves jumping on stocks that are on the move. When the price of a stock moves up, you jump on it. However, when you use this strategy, there are certain things to look for.
For starters, look for news that could cause a stock to start moving upwards. This can include unexpected earnings growth, a new treatment launched by a drug company or news that a larger firm is about to acquire a smaller company. Things like these can start moving a specific stock.
Also, look for stock movement of between 30 and 40 percent. Besides that, use tools that can help you spot trends and ideas. The more tools you use, the better your chances are of succeeding with the momentum strategy.
The Breakout Trading Strategy
This type of trading strategy involves buying a stock when the price of a stock goes above its previous resistance price. However, this strategy is a bit difficult because you simply don’t look at a chart and then make a trade. It requires a bit of work. What you want to do is keep an eye on the trading volume of a stock or how many shares are being traded because when breakout trades happen in high volume, then the chances are the stock will become more sustainable when it continues to rise in price.
Previously, we mentioned how news can drive the price of stocks up, or down, but you can use a trading strategy that involves keeping an eye on the news related to business. Stocks can react rapidly to both good and bad news, so pay close attention to it. In fact, you should check out the news on a daily basis.
If bad news is coming out, then you might want to short a specific stock. However, if there is good news coming out about a specific company, then check out their stock and consider buying a few shares. The more you do this strategy, the better you’ll get at spotting news that you can use to your advantage.
This strategy consists on focusing on making small wins because all of the small wins you make will add up to more money when the day ends. What you want to do is set a target to buy a stock and when to sell it, so you’re doing things that are predetermined. You need to be prepared to make trades fast because this strategy requires fast thinking and decision making. The good news is if you become good at this strategy, you could end up doing very well.
Feel free to do additional research on each strategy. You never know, one of those day trading strategies could end up working for you. Remember, nothing is guaranteed when it comes to trading, but sometimes all it takes is one strategy to help you out.