Stock Market Academy

There are so many ways to win the games of stocks trading, CFDs as well as spread betting. Among the most popular strategies are the day trading, swing trading and scalping. These different concepts are all applicable when engaged in the trading of those financial instruments and commodities mentioned above.

In order to understand these concepts, it is best to define each of these strategies first and state their respective pros and cons.

On the one hand, day traders are those who look for a position once or twice in a day. These are the types of the traders who open their position at the beginning of the trade day and they will close that specific position on order before the market closes. This can actually refer to a very short-span way of trading.

The advantage of day trading is that one can easily detect if he or she is losing or winning the game. This is because in just a day, one can clearly realize if there are some earnings or losses from the positions made. This is unlike long-term trading. However, its disadvantage is that the potential profit is small as well.

While on the other hand, the swing trader does not need to wait for the market to close in order to make profits. This is because it is longer than trading in a day trade but the positions are shorter than those that an investor or trader can hold and trade for couple of months and even years. The advantage of swing trading is that it is more flexible because closing the position to gain profits is not dependent on the closing or opening of the market. However, like the first one, this kind of transaction involves little potential earnings. Nevertheless, it can be maximized through proper handling and management.

Last, but not the least, scalping is another method to trade stocks, CFDs and even in spread betting. This can refer to what they call as the “skimming” of small profits regularly. This is being done by going in and out the positions for few times in a single trading day.

One of the major advantages of scalping when it comes to CFDs, stocks trading and spread betting, is that it is a way of slowly but surely gaining profits. This is considered as the most effective way to surely earn some profits little by little on a regular basis. In other words, this is like always grabbing the opportunity when the tide is favorable on your side. However, the negative side of this is that the amount of potential short-term income is the minimum. This can only be maximized if the trader will carefully and consistently make good decisions.

The shares market have in the recent past defined financial markets single-handedly and in most occasions there are even those of us who have mistaken share market trading to financial trading and that is not surprising as shares are arguably the most traded instruments in capital markets around the world. Share trading on FTSE 100 is a little bit different and in fact it involves a very different approach to share dealing one thing though that makes share trading on FTSE 100 very important is the fact that it provides a very good platform to make very good decisions concerning shares both on the long-term and the short term.  The recognition that indeed this is a place where share traders can explore to make the most out of their share dealings is now a fact that we cannot dispute since it has been vindicated time and time again but what we can ask ourselves is how do you make a mark on the FTSE 100 and for that matter how do you make a profit? Well that is a question that will need good answers.

The FTSE 100 is the most traded instrument particularly in the London stock market and the characteristics if the instrument is that it is at times very volatile, that said it is important to take in to account this reality while coming up with trading strategies to approach the trade. The expert analysis of the FTSE 100 has it that the approach largely suits short term investors but also long-term traders can build on the short-term gains to move their investment portfolios to long-term capacities. The strategies that you take here are the same things that will determine how good you do in the trade and unlike in other instrument where strategies have rather looked very basic, the FTSE 100 is a little bit technical and will require a very good financial expert analysis in the share market trading. However, there are a good number of brokers who can offer you that service and consequently transform your share trading at the FTSE for the better.

One more thing that as a responsible trader you should do is to keep a good eye on the FTSE share index and the share prices. As we have noted FTSE are very volatile and the changes are very fast so it will be very good to have a constant update on how shares are moving, this is very important for your investment as well as your trading strategies, the FTSE 100 share index represent a lot of trading factors put together so you can imagine how crucial it is on share market trading. However, the profitability associated with the FTSE still is very genuine.

The concept involved in swing trading is all about trends in stock markets and in fact, swing trading is basically a strategy that grounds decisions of investments on prevailing trends such that, when the trends predict rise in share prices, investors will buy the shares and while the trends look otherwise, the stocks will be offloaded. In other words what this means is that, trading is done on the basis of the changing trends otherwise known as swing in market trends and thus the name swing trading is derived here.

How swing trading works in stock markets is all down to market trends and the strategy in most cases if not all will recommend entering in to a market with a very strong trending stock which presumably as it has been the case in many instances has a very genuine chance of earning good profits in just a matter of time. The strategy has been vindicated to have a good number of benefits and some of those have included:

• The nature of the strategy is that it is very quick and you can finish and close business in very few hours and take home some good returns making it very flexible.
• Secondly, the trends in stocks occur within a very short timeframe in that, investors can trade on high profit shares within a matter of hours or even minutes and keep capitalizing on the changes minute by minute. If at all this is repeated for the whole day, you can be sure to take home very huge amounts.
• Trading in this strategy is not necessarily on a daily basis and as we have noted, it is based on trends and in most cases transactions made in this approach are very limited but very profitable and that said, in the process of making good money you still cut down on brokerage fees.

When to start trading

As an intelligent trader taking the swing strategy, you will have to be well informed on the appropriate time to start trading and one thing that will determine your investment decisions is the rising or falling market trends. During the rising trends, prices keep rising and even if there is a drop, the value reached still is on a relatively high range compared to previous levels and that is the best time to buy. The reverse opposite of this would be a continuous downward trend with prices hitting rock bottom, this is not the time to buy but actually to offload. During the rising trend, here is when a buying order is placed on shares and the reverse is equally true for the downward trend such that selling orders are placed on shares.

The truth about swing trading is that it has a lot of opportunities only for those with the patience of a cobra, never rush things and always stick to the principles of the strategy and you will be guaranteed positive returns for your investment. The way the market changes is like a rollercoaster, as much as there will be a low, there will always be a high trend.