The truth is that every crisis while deeply unsettling also contains the seed of opportunity. All the opportunities nowadays in the stock market are before one’s eyes just start narrowing your frames 🤏.
If crisis creates opportunities here’s a summary of the top 3 trading strategies to seize them.
1- Momentum Trading:
The first strategy to consider on top of all is the momentum trading strategy, your main trade is to prioritize short-term uptrends and sell when it starts losing the “momentum” or seems that it has been peaked. In this strategy, you don’t seize opportunities in undervalued stocks and wait for them to go high in the long term. “Buy High, Sell Higher”.
2- Swing Trading:
Unlike day traders who close positions daily before the market close, swing trading may last for days or weeks. Swing trading requires a deep technical analysis on 5 – 45 minutes frame up to daily frames, searching for commonly used patterns like MACD, cup, handles, head and shoulders … etc to predict movements and define entry point, commonly entry points are the supports and exits while hitting the resistance level.
Small opportunities with small price changes are the scalper’s target, let’s describe it as “Hit and Run”. 0.5 – 3% profit is the main strategy where scalpers keep looking for their small quick profits in the bid/ask spread. If you are impatient in the market, & can handle stress, and have eyes on screen through the session with fast responses, scalping is your thing.
*🤝 Key Difference between strategies * Momentum Traders
– Work on daily frames and holding positions even after breaking resistance and closing at the peak of the trend
– Last for short-term or long-term durations depending on the strength of the trend
– Doesn’t position on down trends
– Positions on a high momentum, and might wait for counter-trend to lower risk
– Tends to work in short time frames as mentioned previously
– Buying/selling between ranges buying at supports and selling at resistance
– Last only for Short term duration. Can trade on down trends
– Take risks between support and resistance and stop losses when they are proven wrong
– 1 to 5 minutes frame are the scalpers
– Go short on the first trade, longer in the next
– Last minutes maybe a couple of hours to close the position
– Strict Exit strategy because big loss cancels many small gains
– Hundreds of daily trades
– Eyes on the screen
Now after going through the top 3 trading strategies with their key points and differences, I assume that at least one of them matches your personality and it’s your turn to dig deeper into your selected strategy and learn it’s pros and cons, trade frequency, entry and exit strategies, position selection and size.