14.1 Short- term trading
Very often professional as well as non-professional investors have a tendency to trade on a continuous basis. Therefore, long-term trading means, at least for a few, less exciting and less challenging. Short-term trading can be very lucrative, but also risky. It can last for as little as a few minutes to as long as several days. For example, volatility, volume, and knowing whether the longer term trend is up or down are all important for short-term stock trading.
- Volatility is caused due to stocks moving up or down at a rapid pace.
- Volume means quantity of stocks traded.
- Trend is about the stocks reaching higher highs and higher lows or lower highs and lower lows.
- Strategy is about how to enter or exit the short-term trade. To succeed with any strategy, traders must understand the risks and the rewards of each trade. They must not only know how to spot good short-term opportunities, but also must be able to protect themselves from unforeseen events. Therefore, it is desirable to discuss certain basics of short-term trading. These are no secret tips to achieve success in short-term trading.