Stock Trading Strategies

Stock Trading Strategies:
Developing a Successful Game plan

Developing strong stock trading strategies is as essential to good investing as a well-written business plan is to a thriving company or a playbook is to a winning football team. It sets your investment direction, risk boundaries, and goals.

The most common stock trading strategies are:

Day Trading
Swing Trading
Position Trading
Value Investing

They are all as distinctive in their approach as the traders who select them. No one strategy is inherently better than another, but once you decide on one – stick with it.

Don’t let a bad day at the office, traffic gridlock, or a frustrating loss on the market force you into an emotional decision that goes against your set plan. Flip-flopping between strategies, or knee-jerk reactions brought on by greed or fear, is sure to keep your investments in red ink.

Good stock trading strategies are the
power behind every profitable trader

Day Trading involves buying and selling stocks within the same day. Day Traders share a common philosophy – own no stock... and make a profit at it! Hundreds of trades can, and usually need to be done on the same day making it an adrenaline junkie’s dream come true because of the minute-to-minute price fluctuations, insane pressure and extreme risks. For Day Traders this stock trading strategy is as addictive and profitable as gambling, and for all but the extremely prepared, it is. You can view our favorite day trading system at this link.

Swing Trading, also known as Momentum Investing, is all about riding waves with your stock portfolio instead of a surfboard. The Swing

Trader takes advantage of brief price swings in strongly trending stocks. They buy when the stock is about to go up, and sell (or even sell short) when it is about to go down. Unlike Day Trading, you’re the proud owner of stocks for days, and sometimes weeks, while waiting for the optimum buy/sell point. This requires some patience, but it can be very rewarding and it involves less pressure and work than being a Day Trader. Both Swing Traders and Day Traders share many of the same risks. View our favorite swing trading system.

Position Trading, or long term trading, carries much less risk than either of the above two stock trading strategies. Position Traders aren’t driven by the daily ups and downs of the market. These investors look for changes in market trends and analyzing them as early as possible. Essentially, they buy into a new up-trend, sell into a new down-trend, and go on vacation when the trend charts look like a bowl of spaghetti. They usually hold the stock for weeks or months and can be rewarded with larger than normal gains for their patience.

Value Investing is tailor-made for every bargain hunter and “Warren Buffet wannabe!” Value Investors, unlike the three other trading strategies, aren’t looking for the quick turnaround, or short-term capital gains; they want stock ownership in high-quality, under-valued companies that know how to make money. Value Investing requires an avid commitment to research and due diligence to ferret out the critical information before analyzing the data unemotionally and giving little or no attention to what the market is doing. The rewards for strict attention to the details in this strategy can be very lucrative.

No matter which of the stock trading strategies you select, remember to stick with it; stay unemotional and never invest with money needed for rent/mortgage, bills, or food.

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