14.1 Short- term trading

Hanumant Dhokle

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.

  1. Volatility is caused due to stocks moving up or down at a rapid pace.
  2. Volume means quantity of stocks traded.
  3. Trend is about the stocks reaching higher highs and higher lows or lower highs and lower lows.
  4. 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.
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