Stock Trading

Like all things in life this stock trading method is not without its downsides too. This stock trading strategy requires a lot of work, time and effort on your part. You must pay consistent if not constant attention to the market during trading hours. Your costs can run high with this trading strategy since you are trading stocks frequently.

Swing Trading
The swing trader is someone who is looking to make larger trades and stretch them out over a day, a few days or a couple of weeks. With the slower cycle of trades, there are fewer commissions, less chance of error and the ability to capture the more significant multi-day profits of swing trading.

Technical analysis is typically used to help identify swing trade opportunities and they target a higher percentage of return than in day trading. Along with the higher profit targets also comes a higher risk per trade.

If you are looking to trade over a longer timeframe, you have to expect a higher average risk per trade just to account for the retreats common in all stock and futures market trading. You also have overnight exposure and you are also exposed to any major developments or events.

Long-term Swing Trading
This investor is much like the Swing Trader above, but this investor typically focuses on holding their stocks for several weeks to a few months and beyond.

This type of trading strategy focuses on trading the indexes, timing of mutual funds or focusing on the technical and fundamental analysis of those stocks purchased.

By focusing on the longer-term, you can filter out some of the ‘noise' common in virtually all trading markets. Since you are looking at a longer tend, a small move against the trend isn't as much of a concern (although consistent moves against the trend should not be ignored).

The profit objective of this stock trading method can be quite large with 20, 30 or even 50 percent or greater not being out of the norm.

Again with the larger timeframe you have a larger risk, especially with stocks that tend to be more volatile. With this trading strategy you also miss out on the shorter-term swings the market might make.

Buy and Hold Trading
This type of investor might also be called the buy and forget investor, typically purchasing a stock and holding onto it for years. If you pick right using plenty of fundamental analysis and market sentiment analysis, the gains can be quite large with very few trading costs for this stock trading strategy.

Unfortunately, most investors using this stock trading method don't truly have a long-term trading goal in mind other than to amass stocks and just hold on to them.

This is why it is better for the buy and hold investor to start thinking more like the long term swing trader. You go from no true strategy to a specific strategy where you always know when you enter into a trade what your objectives are and how you'll exist should the market go against you.

The Stock Trading Review Team

Copyright Stock Trading Review.com 2005