Being able to match a trader's individual personality and strengths with a specific technique, is perhaps the best way to begin day trading, in that it can vastly increase a trader's chances of success.
Generally speaking, day trading involves buying financial securities and then selling them on the same day, and those who are involved in this practice are referred to as being day traders or active traders. Unlike in the past when this was reserved primarily for fund managers, banks, investment companies, and financial institutions, the arrival of online trading has by all accounts open the doors to the world.
Strategies Used In Day Trading
As you can well imagine, there are nowadays a variety of strategies and techniques being used by active traders in order to ensure they can benefit financially. These include:
Contrarian Investing, News Playing, Rebate Trading, Trend Following
Contrarian investing is a strategy which is based on the belief that financial securities which have been rising steadily will at a later stage begin to fall. The opposite view applies to securities which have been steadily falling.
News playing, as the name suggests, is the technique of buying and selling securities based on news released by the company.
Rebate trading is another popular strategy which uses ECN rebates as the main source of income. Generally speaking, traders who use this strategy will usually purchase low priced securities in vast quantities.
Scalping involves establishing and liquidating a security quickly - often within seconds of minutes of each other. The goal of scalping is to gain profit from the small price gaps that occur immediately after purchase.
Trend following is basically the opposite of contrarian investing, in that the strategy is based on the principle that securities which have been rising steadily will continue to do so, while those securities which have been falling steadily will continue to fall.
Other well known day trading strategies include the likes of 'short sells' and 'range-trading'.
Finding the Right Strategy
Interestingly enough, statistics seem to suggest that approximately 80% of traders end up losing their available capital even before they've managed to learn about the various strategies. This is exactly why it's so important to begin slowly, and to only take small risks in the beginning. Likewise, it's of paramount importance to find the ideal strategy so that a profit can be made. Below are a few tips regarding how one should go about finding the right trading strategy.
Matching strategy with the trader - it is crucial to match a trader's personality, strengths, and comfort level with a specific strategy. In other words, those who feel uncomfortable taking risks should focus on scalping, news playing, or rebate trading, while those who enjoy taking risks can go ahead and become involved with contrarian investing.
Starting mall and treading lightly - newcomers in particular should start out slowly by making small investments, as this will afford them an opportunity to learn about the different advantages and disadvantages regarding the different strategies.
Day traders can of course also benefit financially from using multiple strategies at the same time. For example, you could consider investing the majority of your capital using one of the low risk strategies, while at the same time investing some capital using one of the high yielding strategies. - 31876
Generally speaking, day trading involves buying financial securities and then selling them on the same day, and those who are involved in this practice are referred to as being day traders or active traders. Unlike in the past when this was reserved primarily for fund managers, banks, investment companies, and financial institutions, the arrival of online trading has by all accounts open the doors to the world.
Strategies Used In Day Trading
As you can well imagine, there are nowadays a variety of strategies and techniques being used by active traders in order to ensure they can benefit financially. These include:
Contrarian Investing, News Playing, Rebate Trading, Trend Following
Contrarian investing is a strategy which is based on the belief that financial securities which have been rising steadily will at a later stage begin to fall. The opposite view applies to securities which have been steadily falling.
News playing, as the name suggests, is the technique of buying and selling securities based on news released by the company.
Rebate trading is another popular strategy which uses ECN rebates as the main source of income. Generally speaking, traders who use this strategy will usually purchase low priced securities in vast quantities.
Scalping involves establishing and liquidating a security quickly - often within seconds of minutes of each other. The goal of scalping is to gain profit from the small price gaps that occur immediately after purchase.
Trend following is basically the opposite of contrarian investing, in that the strategy is based on the principle that securities which have been rising steadily will continue to do so, while those securities which have been falling steadily will continue to fall.
Other well known day trading strategies include the likes of 'short sells' and 'range-trading'.
Finding the Right Strategy
Interestingly enough, statistics seem to suggest that approximately 80% of traders end up losing their available capital even before they've managed to learn about the various strategies. This is exactly why it's so important to begin slowly, and to only take small risks in the beginning. Likewise, it's of paramount importance to find the ideal strategy so that a profit can be made. Below are a few tips regarding how one should go about finding the right trading strategy.
Matching strategy with the trader - it is crucial to match a trader's personality, strengths, and comfort level with a specific strategy. In other words, those who feel uncomfortable taking risks should focus on scalping, news playing, or rebate trading, while those who enjoy taking risks can go ahead and become involved with contrarian investing.
Starting mall and treading lightly - newcomers in particular should start out slowly by making small investments, as this will afford them an opportunity to learn about the different advantages and disadvantages regarding the different strategies.
Day traders can of course also benefit financially from using multiple strategies at the same time. For example, you could consider investing the majority of your capital using one of the low risk strategies, while at the same time investing some capital using one of the high yielding strategies. - 31876
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