Stock Trading is all about arriving at the right estimates and making nearly accurate speculations so that the trader is able to reap profits from his investments. Each trader has his own strategy which is based on the fundamental trading rules that have been theoretically established. Coming up with a suitable strategy requires good experience of managing the market scenarios and understanding the finer nuances of operating in the major trading markets.
FX trading is also a popular trading market and it poses even greater challenges as the rates of the foreign exchange fluctuate as per the dynamics of the global economic market. While coming up with a perfect strategy is next to impossible for traders, it is feasible to come up with really effective strategies that help minimize losses and provide greater chances for profit.
Penny Stock Trading Strategies:
Penny Stock Trading Strategies help to determine the best conditions for trading in penny stocks which are regular stocks that are trader are fairly low prices (approximately $5 or less per share). These stocks are usually not listed on any security exchange market even though there is permission to include them. Due to the nature of costs associated with these securities, small businesses involve themselves in their trade. The trading volume for these stocks are also low. Some may consider this as being quite a profitable opportunity in terms of stock trading, but there are considerable risks involved in the trade of penny stocks. It is therefore advised that their trading be taken with adequate caution as low costs of the shares should not cloud your judgement on selecting the best strategy to minimize losses.
Swing Trading Strategies:
This trading strategy is suitable for traders who are discretionary in their approach. The success of the trading activity in this strategy depends on the extent of discretion exercised by the trader. This strategy is based on the concept that holding tradable assets for a certain duration could reap profits due to the “swing” or change in the prices of the assets. Traders can keep this position for durations that are longer than day trading holding time and shorter than buy and hold investment positions that generally last a couple of years. When using this strategy, traders often utilize mathematical rules for estimating the best conditions for buying and selling. This also helps in eliminating the involvement of emotional biasness, subjectivity, and excessive manual efforts that are otherwise common in the swing trading approach. Risks in this strategy are mainly dependent on the nature and extent of market speculation involved.
FX Trading Strategies:
Forex trading strategies comprise a group of analytical rules and methods that are used for determining the best conditions for selling and / or buying currency pair at a specific time. These strategies are planned with the help of two specific aids, namely, news and current events that have an impact on foreign exchange rates and charting tools designed for technical analysis. Any trader who has dealt in foreign exchange is aware that with such high fluctuations and unstable dynamics of the currency market, there are only two ways of planning these strategies – speculation and hedging. Due to the nature of trading involved in this market, it is usually advised to make use of automated trading systems where traders can “teach” the system to monitor the market as per his own strategic methods and detect favourable trading conditions. The only alternative to this approach is to get a person to manually monitor the minute changes on the screen and make appropriate analyses and calculations based on the changes.