Active Trading
Active Trading, also known as short-term trading, focuses on generating profits from price action by speculating on short-term trends. Active trading offers potential for higher returns but carries risks such as transaction costs and exposure to market events. It unveils a world of continuous analysis, strategic decision-making, and adaptability to market dynamics. Active traders use various tools, such as fundamental, quantitative, and technical analysis, to identify opportunities in the financial markets. They trade a range of instruments, including stocks, bonds, currencies, and commodities, executing frequent transactions to capitalize on market fluctuations.
ABOUT ACTIVE TRADING
Active trading can be a way to grow your portfolio and focus on generating profits from price movements by speculating on a short-term trend.
Active traders tend to focus on strategies that are news driven and involve a higher than usual trading volume as it offers increased liquidity.
They are constantly plugged into the stock market, analyzing trends, looking for new opportunities, and constantly ready to make a trade.
TYPES OF ACTIVE TRADING
Day Trading.
Day trading involves buying and selling a security within the same trading day, usually in an attempt to take advantage of a specific event expected to influence the stock’s price.
Swing Trading.
Swing trading involves positions held for a period of several days to several weeks. The swing trader is taking advantage of price moves that occur on hourly, four-hour, and/or daily price charts.
Scalping.
Scalping uses a high volume of trades to take advantage of small price discrepancies over the very short term.
ACTIVE TRADING ORDER TYPES
Stop Order.
Stop orders play a crucial role in capturing breakouts and limiting losses in active trading.
Stop Loss.
A stop-loss order is employed to manage losses by setting a predetermined exit point. If the market moves against the trader, this order helps limit losses.
Limit Order.
Limit orders are utilized to capture favorable prices, allowing traders to enter or exit positions at specific levels.