Short-term trading can be done in less than a week and by holding a position not longer than 24-hours. Although the trade can be accomplished for a short period of time, it can still be susceptible to risks. However, it is more manageable than those occurring during a long-term trade.
There are two distinct styles in short-term trading called the day trading and scalping. Day trading is usually finished within the day and the profit is usually garnered at the same time frame. Scalping, on the other hand, is a more aggressive type of trading which profits in small price changes.
Whatever short-term trading you’re into, it will surely require a set of strategies you can lean on to ensure success, so here are the four strategies in short-term trading:
Support and Resistance
Support happens when a price finds support as it plummets while resistance takes place when the price seeks resistance as it rises. Both of these concepts are important in technical analysis to identify price points at the level it is thought to stop or reverse. Learning how to switch on different time frames by identifying price points is a relevant skill to be acquired by beginners.
In anticipating market movements, trendlines and moving averages are important to take note of to determine uptrend and downtrend. Basically, support is the lever under trading prices while the ceiling is the resistance.
Moving averages can help identify support and resistance. It is defined as the average price for security which is calculated by adding the closing prices in an x number of days and then dividing it by x. It is a commonly used technical indicator which is a very helpful trend-spotting tool.
If you want to advance your skills in forex trading, it will be beneficial for you to understand three types of moving averages namely simple, exponential, and linear. This will direct you to trends that will offer you the best profits in the market.
In looking for stock market trading patterns, the candlestick pattern technique is one of the known strategies used by brokers. This is used to determine different levels of security prices over a period of time. It was first used by Japanese marketers before it was introduced to the Western trading market a hundred years later.
This concept is used to know when to enter and exit trades and to analyze daily or hourly cycles of forex trading. The appearance of the candlestick helps the trader determine the high, low, closing, and opening of prices.