Before you start trading, you must first understand the different trading strategies you can take, so you can pick the one that best suits your financial goals. These are some of the strategies you can adopt based on the frequency of your trading activities.
1. Scalping
This strategy suits you if you want to start with very short-term trade with small price movements. With scalping, your goal is to make a small profit from each trade, hoping these little profits accumulate. This strategy, however, requires you to have a disciplined exit strategy as one large loss can wipe off the profit you have built up steadily.
2. Day trading
Also called intraday trading, this strategy is best if you prefer to actively trade during the day, generally as a full-time profession. With day trading, you can take advantage of price fluctuations that happen from when the market opens until the closing hours.
As a day trader, you hold multiple positions open during the day, but careful not to leave them open overnight. This is to prevent exposure to overnight market volatility. In day trading, you will need to have an organized trading plan, so you can quicky adjust to fast movements in the market.
3. Swing trading
In this strategy, you hold a position for a few days or weeks to capture short- to medium-term profits. As a swing trader, you take a technical approach to analyzing the market by studying charts and evaluating price movements to identify trends.
