Are you often confused about how to trade effectively in the market? Many people struggle with trading, either incurring high costs or failing to keep up with the market's rhythm. Trading demands a certain finesse, whether going long or short. There's a crucial distinction between 'going long' and 'going short.' Going long means buying before selling, while going short is the reverse: selling before buying. However, both strategies share a common goal: reducing holding costs and amplifying profit margins. Today, I'll reveal two tactical approaches for trading. Mastering these could transform novices into seasoned investors, leaving institutional investors trembling in their wake.
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The first strategy we're exploring is 'Intraday Trading.' Intraday trading is suitable for those with the luxury of time to monitor the market's fluctuations. The stock prices fluctuate within four-hour windows, allowing astute investors to make trades by leveraging these price swings, effectively reducing their investment costs. But how does one trade intraday?
It's imperative not to have a full position; otherwise, you risk having no liquidity for trading. Intraday trading primarily revolves around observing intraday moving averages. When the stock price is above the intraday moving average and experiences an unexpected surge with low trading volume, that's the prime time to sell. After selling, wait for the price to drop during the day and buy back the shares, effectively 'going short' intraday. On the contrary, 'going long' intraday occurs when the stock price is below the intraday moving average, encounters a significant volume-induced drop, but registers substantial trading in a particular zone. This signals an opportune moment to buy. After buying, wait for the surge before selling some holdings to reduce overall holding costs. These two methods are the essence of intraday trading.
The second strategy is 'Trend Trading,' ideal for those with limited time for constant market watch and particularly beneficial for medium-to-long-term investors. To practice this, setting an average cost line is essential (commonly using the 5-day or 10-day moving average). When the stock price surpasses this average cost line by more than 10%, it might be an optimal time to sell. Wait for the price to return close to the average cost line before considering repurchasing or buy near the average cost line, awaiting a surge before selling some holdings, thus capitalizing on the trend. However, one pivotal prerequisite is the upward trend. Taking part in a downward-trending stock will lead to exhausting and futile trading efforts, ultimately resulting in the break-even point. Therefore, it's crucial to comprehend that the essence of trading is not solely about escaping losses but primarily about risk management, building substantial profit margins, and increasing returns. The ultimate aim is to safeguard your principal when risks arise.
Have you understood these strategies, folks? If so, drop a comment to cheer on and share your newfound knowledge. For those who haven't, save this content and revisit it multiple times for better understanding. That's all for today's sharing; catch you in the next video!