Stocks, Forex and Other Money Matters

One of the best ways to increase the chances of success with trading is for a trader to try and match their own individual personality with the specific techniques employed in the field.

Day trading is the practice of buying and selling financial instruments, such as securities, within the same trading day. Traders who practice day trading are called active traders or day traders. This field used to reserve for financial firms, fund mangers, investment firms, and banks. With the advent of electronic and online day trading, however, it has become accessible to almost anybody interested in the practice.

Day Trading Strategies

There are a wide variety of strategies and techniques used by day traders to help them make good profit. The basic day trading strategies are as follows:

Contrarian Investing, News Playing, Rebate Trading, Trend Following

Contrarian investing is the day trading strategy that follows the ideology that assumes that financial securities that have been steadily rising will later on reverse and fall. The opposite view is applied to already falling securities.

News playing is basically a technique used to buy and sell securities based primarily on news which has been made available by a specific company.

Rebate trading is generally a strategy that relies on ECN rebates as the main source of income. Generally speaking, traders who use this strategy will usually purchase large quantities of low priced securities.

Scalping is a technique which involves buying securities and then selling them within minutes, or even seconds. As a result, traders who use this strategy aim to profit from the small price gaps which occur almost immediately after a purchase.

Trend following is basically the opposite of contrarian investing, in that the strategy is based on the principle that securities which have been rising steadily will continue to do so, while those securities which have been falling steadily will continue to fall.

Other popular trading strategies include the likes of Short Sells and Range Trading.

Determining What The Best Strategy Is

Interestingly enough, statistics seem to suggest that approximately 80% of traders end up losing their available capital even before they’ve managed to learn about the various strategies. This is exactly why it’s so important to begin slowly, and to only take small risks in the beginning. Likewise, it’s of paramount importance to find the ideal strategy so that a profit can be made. Below are a few tips regarding how one should go about finding the right trading strategy.

Matching the right strategy with the right trader – one of the most important things to bear in mind is that it’s essential to match a trader’s individual personality, their strengths, and also their comfort level, with the correct strategy. In other words, those who feel uncomfortable taking risks should rather consider scalping or news playing, rather than becoming involved with contrarian investing, which for the most part is best suited to those who are willing to take risks.

Starting mall and treading lightly – newcomers in particular should start out slowly by making small investments, as this will afford them an opportunity to learn about the different advantages and disadvantages regarding the different strategies.

Day traders can of course also benefit financially from using multiple strategies at the same time. For example, you could consider investing the majority of your capital using one of the low risk strategies, while at the same time investing some capital using one of the high yielding strategies.

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