Short term trading is a good investment strategy for those who understand how the market works. While a short term trader might already know how to analyze technical data, they might need help finding good stocks each day or picking strategies. Here are a few Investing and Trading advise to help you make more effective short term trades.
Start Your Research Early
One of the key strategies of short term trading is getting ahead of the curve. You want to be able to research stocks to trade and predict which direction they will move. Since you will likely have a limited window for your trade, you should start researching early.Seasoned traders will spend a few hours researching and speculating on stocks before the market opens each day. You want to conduct your research as close to opening as possible so that you have the latest information available before they trading day starts.
Look at stocks that had a significant amount of movement after hours the day before and try to identify what made them move. Another strategy is to read lists of best stocks to buy today for short term to get ideas. Many investors develop their own strategies and routines to help them identify what to look for.
Know Your Entry and Exit Points
While speculating good short term trades based on other people's research or yesterday's big movers can be useful, you won't be successful unless you conduct research. You still need to do both fundamental research and technical analysis to identify appropriate entry and exit points.Successful short term trading doesn't just mean buying low and selling the second the stock turns red, it means being patient. You need to know when the stock is going to run, when it is going to fall, and where the floor is.
Don't rely on other people's charts to identify entry and exit points. It is much better to analyze the chart for yourself so that you know exactly what to look for.
Be Picky
There are hundreds of stocks every day that are going to have a nice momentum. While it can be tempting to try and find as many of these short term trades as possible, you don't want to spread yourself too thin. When you chase multiple stocks throughout the day, you may find yourself distracted or making trades that are slightly off. This is why many people limit their watchlists or specialize in an industry.You should also have a very specific list of criteria for each stock you follow. Every trading strategy is a little different, but writing out a list can help you to gain focus and make more successful short term trades. Just remember to stick with the list!
Don't Make Decisions Based on Social Media Hype
If you have conducted research on your short term trade and understand how the stock is going to move, people's comments on social media will not matter. Comments can often be misleading and my encourage you to make a bad trade. Instead, focus on your entry and exit points and only discuss your trades after the fact.There are several ways to identify a good short term trade. Doing research and analysis ahead of time can help you make better trades. Improving your focus and being picky about each trade can also improve your trading success.
