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Common Trading Strategies

Updated on September 22, 2010

Stock Market for Dummies

Successful stock trading strategies are necessary skills that need to be developed when you’re into investment trading. This will help determine your goals, limitations and the risks that you are willing to take. It will help build the path of your investment plans. For those who are still reading books written to help stock market for dummies, you may want to include learning about these strategies as well.

4 Common Trading Strategies

There are 4 different strategies when it comes to stock trading. They don't belong in any specific order and not one of them may be considered far better compared to the other. Each of these stock tips and known methods is very distinct when it comes to their own approach. It also applies to the stock trader that chooses to utilize these strategies. The technique is to cherry-pick one strategy and tries to stick with it for as long as you can.

  • Day Trading - the reason why it is called Day trading is because stocks are bought and sold within the very same day. A Day trader believes in one philosophy alone and that is not to own any stock. They use the stock just to make tons of money out of it. The number of stocks to be bought and sold in a day can be hundreds in number and they all need to be done in just one day. Stock prices oscillate every minute making it a haven for stock traders hungry for the extreme risk factor it brings. Day trading can be very profitable and addictive at the same time.
  • Position Trading - is the opposite of day trading It is a long term commitment for stock traders that use position trading. It involves less risk and a lot of patience. They need to hold on to their stocks, it can be weeks or even months. A stock trader that uses position trading is considered to be accurate when it comes to predicting and analyzing the ups and downs of market trends before it happens. They usually purchase stocks on high trends and sell them on low trends. While the stock market hangs in turmoil, they have a habit of disappearing from the stock market scene. Their unflappability rewards them larger profits.
  • Swing Trading - is like riding the waves but instead of using a surfboard, you use your stocks to do it. It is what they call momentum investing. It's all about taking the plunge at the right time. The prices in the market are always inclined to swing towards high trending stocks. Swing traders buy stocks when they're on the edge of going up and sell them when it's about to crash. It is all about the perfect timing.
  • Value Trading - is an investment made for the committed and determined. Value investors are not looking for sudden improvements or quick turnaround. They are in search of high-quality capital gains. Stock ownership is the name of the game. Diligence and the commitment to do research is the requirement for this type of investing. Value traders are emotionally unattached to the stock market. They pay no attention to its highs and lows. Attention to details and crucial information is what this strategy is all about. The rewards though are well worth your while.

These 4 different strategies on stock trading will help you determine what method will suit your personality best. Stock investing for dummies books are usually useful guides. You will always be considered a dummy for something that you don't know. Now with all these information, it's just a start.

What is your most successful trading strategy?

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