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You should know some of the ins and outs of day trading, let's look at
some of the key techniques new day traders can use. Once you have mastered
these techniques, developed your own personal trading style and set your end
goals, you can employ a number of strategies to help you in your quest for
profit. Although some of these techniques have been mentioned above, they are
worth going back into.
Following the trend: Those who follow the trend buy when prices rise or sell
short when prices fall. This is done on the assumption that prices, which have
been steadily rising or falling, will continue to do so.
Contrarian
investing: This strategy
assumes that a rise in price will reverse and fall. The contrarian buys on a
dip or sells short on a rise with the explicit expectation that the trend will
change.
Scalping: This is a style in which a speculator takes advantage
of small price gaps created by the bid-ask spread. This technique usually
involves quickly entering and exiting a position in a matter of minutes or even
seconds.
Trading the
news: Investors using
this strategy will buy when there is good news or sell short when there is bad
news. This can lead to higher volatility, which can result in higher wins or
losses.