Trading Styles
Ever hear of the terms
Scalping, Swing Trading,
Trend Trading or Momentum Trading?
Scalping
Momentum
Swing Trading
Trend Trading
"The different forms of trading are actually better differentiated
by time frame
more than the techniques, that are involved.
Because of the difference in time frame,
different techniques
must be used in order to reap profits from the capital markets."
Scalping-is a term used for a method where trades are opened and closed
within a very short time scale, perhaps anything from a second or two to a few minutes.
This is a day trading method where Scalpers make several, perhaps hundreds of trades a day,
accruing small profits intraday for an overall daily return.
Momentum-trading is another day trading method where the trader sees an
acceleration in a stock's price, earnings, or revenues and takes a long or short position in the stock with the
hope that its momentum will continue in either an upwards or downwards direction. Once momentum slows
down or falls, the trade is exited. The holding period is commonly from a few hours up to a whole day.
Swing Trading-is a style of trading that attempts to capture gains in a stock within
one to four days.
Private, at home traders mainly use this technique. The individual trader is able to exploit the short-term stock movements w
ithout the competition of major traders. Swing traders use technical analysis to look for stocks with short-term price momentum. These traders aren't interested in the fundamental or intrinsic value of stocks but rather in their price trends and patterns.
Trend Trading-is a trading strategy where traders commonly hold their positions for up to a
month. It is a trading strategy that attempts to capture gains through the analysis of an asset's momentum in a particular direction. The trend trader enters into a long position when a stock is trending upward (successively higher highs). Conversely, a short position is taken when the stock is in
a down trend (successively lower highs).
Swing Trading and Trend Trading seem like the way to go for most private traders
who have a day job or who cannot afford to day trade the market.
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