Stock Market Trading Strategies
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Stock Market Trading Strategies

Stock Market Trading Strategies

Many inexperienced traders make the mistake of venturing into the world of trading without first doing their homework.

The end result is that they trade on an ad hoc basis, without a clear system. When they lose they do not really understand why and when they make a profit the same is often true.

In the end trading is very much like any other type of business. You need a business plan and you need to stick to that plan if you want to be successful. Below we will look into some of the most important components of winning stock market trading strategies.

Stock Market Trading Strategies - Know Your Time Frame

If you work full-time, you will most likely not have time to watch stock prices throughout the day. In that case swing trading, with a time frame of a few days to a few weeks, might be closest to your trading needs.

If you have lots of time available, you could be at home with day trading. Most day traders open their positions in the morning and try to close them before the end of trading on the same day in order to avoid overnight financing fees.

The time frame you choose will, to a very large extent, influence the trading strategy that works for you.

Stock Market Trading Strategies - Stop Losses

Your financial situation and your risk appetite will determine how much you are prepared to lose on a specific trade and during a specific day, week or month.

The important thing is that you should determine a stop loss level before you enter a trade and never stay in that trade if it drops below that price.

Stock Market Trading Strategies - Number of Open Positions

As a rule, the law of diminishing returns often applies to the number of open trades you have.

While it is important to diversify, i.e. not put all your money in one trade, the more trades you have open at any given moment, the more commissions you are going to pay and the more difficult it becomes to properly monitor your trades.

Stock Market Trading Strategies - Example of a Trading Strategy

There are literally thousands of potential trading strategies and ultimately you have to find one or two that work for you and stick with them.

A potential trading strategy is to use the well-known Japanese chart system called Ichimoku Kinko Hyo. When the price of a stock breaks out above the Ichimoku cloud, wait for a confirmation signal, such as the red Tenkan Sen line also breaking out above the cloud. When that happens, buy the stock.

Make sure you have a stop loss that you are comfortable with. As soon as the price drops below the blue Kijun Sen line again, get out of the trade.

This simple strategy cannot guarantee you a profit, but, if followed consistently, it can help to improve your chances of making successful trades. For more details see Index Spread Betting Strategies.

Spread Betting Strategies and Tips


Under no circumstances are the comments and the information provided herein to be considered an offer or solicitation to invest and nothing herein should be construed as investment advice.

Neither CleanFinancial.com nor Financial Spreads or any contributing author accept any responsibility for any use that may be made of the above or for the correctness or accuracy of the information provided.



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Risk Warning: Spread betting and CFD trading carry a high level of risk to your capital and you may lose more than your initial investment. Spread betting and CFD trading may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.

'Stock Market Trading Strategies' by DB, updated 19-Jul-11

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Risk Warning: Spread betting and CFD trading carry a high level of risk to your capital and you may lose more than your initial investment. Spread betting and CFD trading may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.

The contents on CleanFinancial.com are for information purposes only and are not intended as a recommendation to trade. Nothing on this website should be construed as investment advice.

Neither CleanFinancial.com nor any contributing company/author accept any responsibility for any use that may be made of the above or for the correctness or accuracy of the information provided.


* Tax law is subject to change or may differ if you pay tax in a jurisdiction other than the UK.

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