Stock markets enable persons and institutions to engage in the process of wealth creation in various ways. The participants adhere to a systematic procedure which is time driven, risk driven as well as market driven. Learning the functioning of markets is the initial step before getting to know how decisions are made.
Discussing about trading strategies used in different stock markets
How different trading styles shape decisions
The act of trading in the stock market does not comprise only one activity. It is separated into several forms depending on the longevity of positions and frequency of trades. Both factors need discipline, planning and risk awareness. It is knowledge of these styles that allows traders to select the trading strategies that match their financial objectives.
Overview of trading strategies used in different stock markets
Trading strategies are organized ways traders drive into, deal with and out of the positions in the stock markets. These plans vary in terms of market, time, and trading patterns. Various trading strategies are supported by different stock markets based on the kind of liquidity, the level of volatility and the regulatory structure. This awareness of such a relationship enables traders to use the appropriate strategy at the appropriate moment.
How to choose trading strategies step by step
The choice of trading strategies needs to be done logically. In cases of random decisions, financial risk and inconsistency will be on the rise. This can be done by using the following steps to develop clarity before using any method.
Find out your style of trading
The kind of buying or selling that you do on the market is determined by your trading style. It has a direct influence on the kind of strategies to apply.
- Day trading style – In this type of trading, there is a preference to open and close the positions in the same trading day in order to avoid the market risk or price variation existing overnight.
- Swing trading style – This type of trading entails holding positions over a period of several days so as to trade on the medium-term changes of prices influenced by momentum or trends.
- Position trading style – This is a style that is used by the traders who buy stocks on a weekly or monthly basis depending on the market orientation and economical conditions.
- Scalping style – This style will be used when the price movements are very small at high rates of trade and it entails high speed of execution and very strict discipline.
- Long term investing style – As a result of that, the company will not focus on how prices could change in the short term, but will focus on the company fundamentals and market growth in the long term.
How market conditions influence trading strategies
Markets do not always act in a similar manner. Trading principles have to change depending on the conditions. Carelessness about the market behavior usually results in the implementation of the incorrect approach.
- Trending market strategies – These are based on the trading of price direction based on momentum and trend confirmation instruments.
- Range bound market strategies -These will be used to purchase close to support levels and sell close to resistance when the market is moving sideways.
- Volatile market strategies – These apply broader risk tolerances and change in position sizes to deal with the speedy price changes.
- Low volatility strategy – These work on patience and limited targets in case of limited movement in prices.
- Event driven strategies – These are those that react to earnings releases, financial information or significant announcements on the prices of stocks.
Conclusion
Trading strategies (กลยุทธ์ การ เทรด) give some order and discipline in the involvement in the stock market. They harmonize trading styles, time, and risk management in a definite plan. When the proper strategy is used in the proper market condition, the discrepancies are reduced, and the expenditure is checked. The learning of these principles makes traders come into markets with a clear mind and confidence.
