Tech tips to improve your trading
Just about anyone can try their hand at trading, however, real success in this game takes more than investment capital and an expensive suit. The assumption is that those who succeed at trading are good at maths or hold degrees in economics, and while this type of knowledge is advantageous, the fact of the matter is that successful traders are the ones who apply certain skills to the art of finance. In the world of trading, technology has simply served as a means to make the various financial markets and instruments of the world more accessible.
Smartphones have provided business owners and traders with greater versatility – they’re not confined to their PCs for instance and can “trade on the go”. AI (artificial intelligence) and machine learning have made it possible for traders to use automated software, thus mitigating the potential loss that could be caused by a gut feeling. However, when it comes to technical tips in the world of trading, that translates into a strategy.
1. News trading strategy
Aeons ago this type of strategy would have involved buying a copy of a newspaper and checking the financial section. Nowadays you can literally source all your news from the internet by way of websites and streaming, which brings us to the news trading strategy, which translates into making trading decisions based on news and market expectations.
In the digital era, news travels faster than it ever has and thus traders will need to ingest the information quickly too. Things to consider when using a news strategy include the following: Does the news correlate with the market expectations? Is the news totally factored into the price of an asset/currency/commodity or only moderately? When making trades based on news releases, it’s imperative that you be fully aware of how financial markets operate.
Markets move by way of energy, and the energy comes purely from the flow of information. Thus it’s safe to assume that news is almost always factored into the price of an asset. A news strategy can really come in handy when trading in volatile markets, including commodities and other oscillating markets.
2. End-of-day trading strategy
As the term suggests, end-of-day trading is a strategy that involves trading towards the close of the markets. End-of-day traders or nocturnal traders become active when the clarity of the price becomes clearer, and this entails an indication of whether the price is going to settle or close. To pursue this strategy, a trader would have to study the price action and then compare it to the previous day’s movements.
For instance, if a trader was solely interested in the forex (foreign exchange) market, then currency trading would be their bread and butter, and observing the daily end-of-day performance of the dollar against the other major currencies of the world would determine how they earned a living. Nowadays end-of-day traders can rely on online platforms for Forex in USA, as the US has adopted forex online trading, thus enabling a lot more traders to speculate on the movements of the dollar and its associated currencies.
If you’re going to pursue the end-of-day trading methodology, then it’s advisable that you put in place some risk management orders to mitigate any overnight risk such as a stop-loss order, a limit order, and a take-profit order. This type of trading caters to novice traders as it takes up less time than other strategies, and this notion is reinforced by the fact that you need only study charts at their opening and closing times.
3. Day trading strategy
Day trading, also known as intraday trading is best suited for traders looking to actively trade in the daytime, in other words, if you’d like to make trading your full-time profession, then this strategy is for you. Day traders look to price fluctuations between the vast confines of the market’s open and close hours, often electing to hold open multiple positions in a day, but not overnight, thus avoiding the risk of overnight market volatility. It comes highly recommended that day traders subscribe to an organized trading plan that can accommodate the fast and sudden movements of the markets.