When you trade Shares online you should approach your trading with a strong, well thought out trading strategy with clear goals, profit targets and exit points in mind. Research and analysis of market trends will give you a good understanding of current sentiment, allowing you to identify the best possible entry point into the market.
Your overall trading strategy will take into account the time frame you’d like to trade. Are you looking for shorter term gains, trading on volatility, medium term profits or are you aiming for a longer term strategy with more gradual gains?
If you’re new to Share trading, this guide will help provide you with ideas and tips to help get you trading with confidence.
Day Trading is a focused, hands-on trading strategy that puts an emphasis on short term gains as a result of volatility in the market.
No position is ever held overnight which means that using a Day Trading strategy may result in a comparatively higher number of trades than if you decided to use a longer term approach.
This is a time intensive trading strategy and can carry a larger than normal amount of risk exposure as you are trading in short, compact time frames, with the goal of profiting from sharp price fluctuations.
A Day Trading approach requires a deep understanding of the company or companies which you have chosen to trade as well as the larger market environment and key factors impacting price movement.
A bold approach, Day Trading is often executed by professional traders or by investors using Share trading software.
Position Trading can be a medium or even longer term trading strategy which puts charts at the centre of decision making.
Position Traders use powerful drawing tools, indicators and trendlines on charts to identify market movement, looking for an entry point into the market once a trend has been firmly established. This approach is flexible enough to be used on a daily basis or can also be used with longer, monthly timeframes in mind.
At ETX our advanced charts give you all the tools you need to use a medium or long-term Position Trading strategy when trading Shares.
Swing Trading is another strategy that relies on the driving force of market volatility to create opportunities. Swing Traders analyse the markets closely, identifying key trends on both the upside and downside of a company’s Share price.
They will then look to enter the market as the trend that they have identified ends and volatility around the Share price sets in. This approach relies on a combination of technical and fundamental analysis and careful consideration of market highs and lows.
Buy and Hold
The appeal of a Buy and Hold strategy lies in the relative stability and less active trading time required, as well as potentially longer term profits.
While Day Traders and Swing Traders rely on volatility to identify opportunities and may open and close multiple positions within a short timeframe, Buy and Hold investors try to block out day to day changes in a Stock’s price in favour of long-term trends.
Buy and Hold traders are relentless in their research and analysis, ignoring fads and identifying businesses with strong fundamentals. They look for companies with the long-term potential to grow and deliver stable returns.
*Free Guaranteed Stops are only free at certain times, on some markets for retail clients only - click here for more information