Stock Trading Strategies

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This page describes the elements that make up trading methods with a link at the bottom to a list of different types of strategies categorized by the amount of time a stock is held.

A stock trading strategy is a plan of action for how to trade stocks in order to make a profit, and there are as many strategies out there as the day is long. The trick is finding one or more that really work and fit you.

This series on stock market strategies includes:

Secrets to Stock Market Strategies

A List of Investing and Trading Strategies

How to Find the Best Stocks to Buy

A strategy is like a good novel – it has a beginning, a middle and an end. The beginning is creating ways to find good stock trading candidates. The middle is picking the few that you will trade, letting them “incubate” and monitoring their progress. The end is having criteria for when to close out a position, whether it’s for a gain or a loss.

The way to get started is to set some basic stock criteria parameters and identify probabilities that make it more likely that a stock will successfully earn a profit. These parameters and probabilities act as a mold that you want a stock to fit into.

Probabilities for getting into a position can be comprised of a variety of factors. It might be that you think good fundamentals are important, a technical analysis stock trading setup is signaling a good setup or you see a good price pattern. Whatever it is that becomes your stock trading strategy or group of strategies for different market conditions

The same can be said when it comes time get out of a position. The final part of a trading strategy is having sell guidelines using parameters and probabilities (usually price or indicator related).

Additionally, any stock trading strategies you choose have to fit your time schedule. If you don’t have a lot of time during the day, then day trading won’t work for you, but position trading might. If you don’t want to look at stocks daily then longer term investing is for you.

To summarize, a stock trading strategy is when to get in and out of a stock, and is comprised of:

• Stock Trading Parameters – the general guidelines a stock will meet before it can be considered a possible trade:
• Price
• Volume
• Exchanges
• Probabilities – what a stock is likely to do given certain:
• Fundamentals
• Technical analysis stock trading
• Price Patterns
• News
• Identifiable chart setups
• Length of time stocks are held
• Volatility and movement of stock price
• Any combination that makes sense to you and is profitable

Recognize that putting together a set of strategies is really a creative endeavor – you can pick and choose what you think are the best ways to measure a company and a stock for trading opportunities in different kinds of market environments.

• Most of the time, the simpler a strategy, the better.
• As you begin to clarify a strategy, write down what the parameters and probabilities are on paper. Believe it or not, in the midst of buying or selling you may find yourself bending the rules or even forgetting one of them.
• A strategy should be followed completely.
• If you find something that will make you more successful, by all means, adopt it.

Now let’s cover the basics of strategy-building topics in more depth. Click here for a list of stock trading strategies.

Or, chose any one of the these topics in the stock trading strategy series:

Secrets to Stock Market Strategies

How to Find the Best Stocks to Buy

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