There is no foolproof way to profit in day trading. The majority of the people who enter this trade come with only fundamental knowledge to start with which provided general guidelines for their initial decisions. But as they learn the techniques of day trading, they begin to develop their own systems that work based on the different day trading styles.
There are several kinds of styles involved in this trade. Some of them are as follows:
Swing Trading - Developed during the 1900's, swing trading is a style that adheres to forecasting the succeeding behaviors of the market based on the swing it followed during previous trades. While day trading is described as a trade that is normally held with a maximum of one day, a swing trade could make up anywhere from a day to several weeks. This trade works on the principle that changes the behavior in the market could only yield significant profits if held over a certain period of time.
One of the advantages that swing trading has is that it can give good chances for traders to take advantage of the constant, or at least predictable movements of the market.
Momentum Trading - After its unpopularity before the 90's, momentum trading came back to the scene due to the lively market during this period. The main appeal of this style is that it lets the traders hold their positions overnight with minimal risks. Momentum traders basically jump over to the stocks that are moving upwards and try to ride the momentum until they reach their desired profit. They jump out of the trade at the fist sign of losing.
Technical Trading - One style of trading that is based purely on charts, index graphs, and the likes is technical trading. This style is broader in perspective and approach. Technicians base their decisions on the history of trades, the indicators that worked before and the unique patterns which led to good trades in the past. They use these too for finding good solutions for their trades. There is one significant flaw in this style though; there are too much technical indicators that could obscure the judgment of the technician.
Scalp Trading - Maybe the most popular of all trades. Scalp traders are those who make several trades in a day trying to make small profits from each of these trades by exploiting the possibilities they could present. This style is rather safe since the investment is spread out to so many markets that there are too few highly significant losses and gains. However, it often leads to overtrading.
Miodrag Trajkovic is an expert on information related to Day Trading, Day Trading Mistakes, Day Trading Strategies, Online Day Trading and Day Trading Systems. For more information visit his website http://daytrading.explore-me.com Article Source: http://EzineArticles.com/?expert=Miodrag_Trajkovic |