There are as many stock market trading strategies as their are traders. To give you a sense of the methods that are working, here are the most common stock trading strategies that most successful traders use. Traders have made millions using the following strategies.
You can employ one or all of these strategies. Many traders have different funds where they use these various strategies. I wouldn’t mix them all into one trade. Keep them separate, even if you are using the same stock.
I have also included stock trading tips on how to develop and execute your strategy. It’s up to you to take their time tested investment advice. Most of this is just stock market basics about trading.
Let’s first talk about the different types of stock trading strategies that are out there. Here is a brief summary of each of the major ones.
This looks more like investing than trading in many regards. This is where you enter a position for several months to maybe even over a year. Most of these traders still use technical analysis for entering and exiting positions, as well as for money management. But they also incorporate a lot of fundamental analysis as well to find stocks to buy and short.
There are several reasons why position trading is good to start with. For one, it’s less intense than day trading. You can make a lot of rookie mistakes up front by not managing your emotions. This trading strategy let’s you avoid those situations for now.
Also, you don’t need as high end of a platform. A sophisticated, high performance trading platform can be very expensive. Stock market trading systems like TradeStation can be very costly to use, not to mention the complexities of using it. With position trading, you can simply use your standard retail stock brokerage account to do it.
This is where you enter a position and keep it open for several weeks to months. Here, mostly technical indicators are used for finding trading opportunities and for risk management. Both position and swing trading are good for beginners because they tend to be simpler and less intense. That means there are fewer opportunities for error than with day trading, which we will discuss next. Also, both of these styles are good for beginners because you can do them while keeping your day job.
This is the more well-known of the trading methods. This will require you to ditch your day job, in most cases. Day trading is essentially where you enter a position for minutes to hours, but you never leave it open overnight.
Day trading for a living requires very honed skills and a large trading capital. If you are a beginner at this, you most likely do not want to start with this stock trading strategy.
Before I move on to sharing some stock market trading tips, let’s break it up a bit. Watch the following interview with Steven Ickow, a real millionaire day trading. This is an average guy just like you and me who is a successful day trader. If you’re just starting out, this interview will give you hope that you may one day be able to do it too.
It’s possible to be a normal guy and make millions on with online stock market trading. Steven Ickow does day trading for a living and he does it successfully.Steven Ickow - Millionaire Trader
Ickow trades off of the NASDAQ Level II and watches all of the bids and offers coming in from large institutional investors like Goldman Sachs and Morgan Stanley.
What does Steven Ickow attribute to his great success at day trading? He says discipline, focus and patience is what’s needed to become a successful day trader.
Ickow mentions in this interview that he doesn’t chase trades, he waits for them to get setup. That basically means he waits until he sees an trading opportunity instead of blindly speculating. He also mentions that he only watches a few stocks at a time.
Stock Market Trading Tips
Let’s end with a few tips for developing a winning strategy in the stock market.
First, you have to be patient. Once you pick your stock watch list, you have to be willing for your trade to set up. Like Ichow says, don’t chase the trade. Don’t force something that’s not there. Remember, you are riding the wave of the market, not the other way around. You are not a market maker and cannot manipulate stock prices like they can.
Second, keep it simple. Use the minimal number of indicators and chart patterns to be successful to start off with. Don’t over-complicate things. Hone your skills with a simple strategy and move on from there.
Third, use a practice account to trade before you use real money. It’s correct to say that the emotions won’t be present using virtual money. But emotional and psychological management is much easier to do when you have the technical stuff down first.