Mastering Short-Term Trading
Short-term trading techniques involve a combination of skill, intuition, and experience by a trader. Traders make money by taking short-term positions in securities after identifying opportunities in both bull and bear markets.
Mastering short-term trading requires certain attributes in a trader.
The following factors are fundamental for a short-term trading strategy to ensure your losses are minimized while your gains are maximized.
- Risk control
Some of the risk control measures that short-term traders have to master include the limit order or a stop order.
The limit order is an instruction given in advance about the price points where securities can be traded (buy/sell). It is used for maximization of the trader's portfolio by ensuring that the trader takes advantage of the securities price points whether the price is falling or rising by triggering either the buy limit order or sell limit order respectively.
On the other hand, the stop order is an instruction given to a broker on the extent to which an investor can sustain losses on a given portfolio. The stop order, therefore, reduces the investor's risk by cutting losses before or at a particular price point.
- Technical skills
The technical analysis should also be meticulous enough to determine the trends in the performance of a tracked security over a very short period, including a day or weeks. Having such a capability places you in a better position to be a successful trader. The identified trends being relied on for decision making should have clear recurring bottoms and breakouts as a sign of proper technical analysis.
Another technical tool that a trader has to master is the ability to read different market data presented in various formats. For example, a short-term trader can use the moving average of a particular security to determine the best moment where the price is declining to executive a call.
Essentially, trading is a strategy for realizing quick capital gains in the securities market.
Chris Bouchard is a strategic consultant who works with non-profit leaders and social entrepreneurs to apply concepts and techniques to identify complex strategic issues, find practical solutions, and devise strategies to create and win a unique strategic position. He also offers project development, proposal writing, and project evaluation services.