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Stock trading is a complex process that may be quite confusingand deceitful to a new trader. Therefore, if you plan to startinvesting your money in shares, you should first choose a stocktrading strategy that is most suitable for yourself.
The major difference between stock trading strategies is basedon timeframe. It means that an active day investor will act andreact differently than a long term trader. Any stock tradingstrategy has its own pros and cons so analyse them carefullybefore starting investing your savings in stock shares.
The day trader is an active player; he is always buying andselling shares inside the timeframe of a day. This kind of stocktrading has to advantage of saving you the trouble of facing anyovernight risk. If a share’s price is experiencing a sudden riseor drop, he can immediately take advantage of the situation. Aday trader is usually targeting to get quick profits whilefacing small risks. The bad thing about this type of stocktrading system is that it is very time consuming, you have to bepermanently alert and focused on the stock trends. But thetrading costs represent the worst thing. The commission tends tobe very large when you sell and buy several times a day.
The swing trader is an investor who is focusing on longerperiods of trading, meaning a few days or even weeks. Thismethod has the advantage of having few commissions to be paidand the opportunity to experience some important changes inshare’s price. The main downside of this method is its higherrisk due to the longer trading period.
The long term swing trader is an investor much alike the swingtrader above. The difference between these two is the longerperiod of time, several weeks, he is targeting. This method hasa good aspect: the long term swing trader is avoiding theinconvenience of being affected by minor trading swings. And theprofit is bigger; experienced traders target even a 50% profitusing this method.
But bigger profit brings bigger risks; you will be trading overa longer period of time, therefore you will be exposed to biggertrading risks. And it is likely for you to miss many short-termtrend changes.
The buy and hold trader is the investor who is buying stocks andhold them for a very long period of time, even for years.
This type of stock trading can bring you a very good profit witha small effort. But be careful when you choose to use thismethod as it may turn against you if you don’t have a good,strong investment strategy. This means that the secret to earnmoney out of this method is not just holding to the stock andhope for the best, but to analyse the stock trend, the marketevolution and to set a profit target.
In conclusion, there are methods of stock trading for any typeof person. You just have to analyse every type of method and usethe one it represents you best. And remember that making profiton the stock market requires brains, instinct and luck!
About the author:
For a Stock Trading system and investment strategy that issimple and easy to follow just visit http://www.mytradingsystem.net Portfolio management strategies that work in all typesof stock market.
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