Momentum day trading strategies ~ forex channel trading system
Day tradingrefers to the process of selling and buying of stock of security within the same day. The way day traders make profits is by investing a large amount of capital to take advantage of small price movements in highly liquid stocks or indexes. Two criteria of stock that day traders are usually looking for are liquidity and volatility. While liquidity enables you to enter and quit a share of stock at a good price, volatility represents the estimated daily price range. In order to make maximum profit from day trading, there are several recommended strategies that you can employ. In this article, three of them will be discussed.
Scalping
This strategyfocuses on making profits on small price changes. This is in fact the most popular day trading strategy. Soon after a trade turns to profitable, investors usually sell the share immediately. Because of this, the profits earned are usually in a small amount. Normally, day traders who implement this strategyare placing around 10 to a couple hundred trades within a day. They generally believe that small moves in stock price are easier to capture than large ones.
Fading
Fading strategyrefers to the attempt to short sell stocks after rapid move upwards. The fading market is usually highly risked and demands the investor to have a high risk tolerance. Similar to short seller, a fade trader sells the stock when its price is rising and buy when its falling.
Momentum
Momentum strategyinvolves trading on news releases. In addition, it is also related to finding strong trending moves supported by high volume. While some momentum traders purchase stock on news releases and ride a trend until it exhibits signs of reversal, some fade the price surge.
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