Tag Archives: active trading

What is active trading?

The term ‘active trading’ is used to define a strategy of trading stocks in short terms. In other words, active traders think of the share cost movements not in perspective, but in the next minutes and hours. Obviously, active traders make profits in short terms.

The strategy of active trading may be split into 4 most popular strategies.

Day trading

This active trading style is probably one of the most famous. It’s a method of buying and selling stock within one day, making profits ‘on fly’. The main principle of day traders is ‘no leaving opened positions overnight’. As a rule, day traders are professionals, who have enough experience to switch their strategies fast enough for getting profits.

Position trading

This type of trading may require both short-term strategies and the long-term ones. The main principle of this strategy is catching the trend and benefiting from the wave that is caused by it. The main task of each trader is exiting the trend when its influence lowers down.

Swing trading

When the trend ends, the price volatility appears, because the new trend is trying to be established. The swing traders buy or sell stocks during this price volatility. As a rule, they create a bunch of rules, using analytical tools. The main requirement for the swing traders is to predict the right direction of the stock price movement.

Scalping

Being the quickest strategy of active trading, scalping is also one of the simplest. The main task of a trader, using this strategy, is buying the stock at the bid price and selling at the asking price, getting the difference between these two points.