Share trading requires some strategic preparation. It is essential to get acquainted with the most popular strategies, tips, and educational materials. We have prepared a couple of shares trading tips for our users to make their trading experience better.
Day Trading – what do you need to know about it?
As we already know, day trading is based on short term gains. This means that shares are bought and sold on the same day. The trader has to spend all his time monitoring the stock market with his trading account and waiting for the prices to drop or grow a bit. Such a method is suitable for a small yet stable income.
Day Trading strategies are against holding shares overnight. If you have worked before with long-term investments, you should understand that here you will have to make more deals than usual. Here is what we recommend doing before going in for it:
- Find out what influences the company’s prices.
- Understand the way this specific market works.
- Search for the key factors that can influence the price – news, etc.
- Read some books and articles about day trading.
These are the essential tips for you to succeed in shares trading with this type of strategy.
Position Trading – useful tips
Position trading is considered to be a medium or long term investment. Here traders have to grab their profit on the move. You can even spend 30 minutes a day and experience less stress than compared with day trading.
This type of trading requires some specific skills. A trader should be able to:
- Use indicators;
- Identify key trends;
- Quickly react to the market changes.
Now let us get to the tips. At first, you need to set your resistance and support areas. The “support” area is the place until which the graphic falls, something like the lowest prices. If the current price has fallen until this area, you should buy the position. The “resistance” area is the place in the graphic at which the price is high enough for a profitable deal. You can sell your location as only the graphic reaches that area or wait for it to go higher.
When the price stays for too long in the “support” area, do not hurry to sell your shares. As time passes, there will be traders who will regularly start selling their positions and lower their take-profit (or “resistance area”) not to lose too much money. The longer the price stays in the “support” area, the higher the breakout is expected.
Also, there is a small strategy that after a breakout, traders wait for the first pullback (when the price starts falling from the highest reached position) in the uptrend and buy the shares. It is often practiced when the price continues growing after similar pullbacks.
It’s essential to grab the first pullback, as it gives the possibility to earn more money and gives a higher chance that the price will grow further.
Swing Trading – useful tips
Swing trading is calculated for a period of a few days until a couple of weeks. The goal of this type of trading is similar to the previous ones: capturing a potential price movement and making a profit out of it. Here all kinds of technical analyses are used. A lot of attention is paid to trading signals as well.
Here are the basics that a starting trader needs to know:
- Always follow the trend – your trade should support the overall direction of the market;
- Enter the pattern in the beginning: this way you will achieve higher results and will be less likely to lose money;
- Use multiple indicators: one tool is useful, two tools are better. Always check the information on different sources and compare it, this might help you prevent money loss and make a good profit in the future;
- Do not get stuck on one share: widen your sight by reading trading news, reports, getting acquainted with other shares movements for overall development.
It is also important to have a plan when you enter the market. You need to have a target, a limit, a stop-loss, and an add-on point.
The target is what you want to achieve. A limit indicates the maximum sum of money you are ready to spend on this session. Your stop-loss criteria have to be set ahead as well. For example, you can make a save-point where the maximum amount of money you will lose is 10% of the premier investment sum. An add-on point is when you see the trade goes on well enough, and you understand that it is possible to buy more shares at this moment to gain a more significant profit. Now your limits: the market can suddenly change and turn you thriving income into a terrible loss.
Remember that if you do not plan, this is not trading anymore. This is gambling and nothing else.
Buy & Hold – tips for the basics
Buy and hold is considered to be the most long-term investment type. If you are into this, then this is what you need to know:
- Always analyze the share in details by using various software and your thoughts – long term investments require some research to prevent future losses;
- A lot of traders sell their shares too quickly and then see it grow in price even more – don’t be too hasty and make a bigger picture of the situation;
- Stick to your first strategy.
You should also attempt buying the cheapest position possible to gain maximum profit in the future. Calculate and always think ahead!
We hope that these shares trading tips were useful to you. If you have any questions left, contact your financial analyst for more details.