8 Time Tested Powerful Stock Trading Strategies Every Trader Should Know

As quoted by the legend of the investment community- Warren Buffet; 

" Never invest in a business you cannot understand, and never invest at unreasonable variations."

The lure of big profits from equities has always attracted investors to the lap of stock markets. But making profits through trading is not easy. It requires extraordinary fundamental analysis skills, research analysis, discipline, and patience.

Stock traders prefer powerful stock trading strategies to buy and sell holdings. These effective stock trading strategies help arbitrage market volatility, increasing profits from different call options. These stock trading strategies every trader should know have worked most of the time and helped many of our students become stock market wizards and create wealth.

Smart investors, come ready! Our Elite-certified courses are a foolproof game plan. You can take calculated risks for high returns with the proper knowledge and insight.

To learn all about successful trading strategies, enrol in the Stock Market Institute In Indore for courses including:

• Advanced Level Smart Investment and Trading Professional

• Smart Investment & Trading Professional

• Technical Analyst

• Options Strategy Professional

 

What Are Trading Strategies?

A trading strategy is a systematic approach preferred by stock market traders for buying and selling securities in a volatile market. These strategies are formulated after understanding the psychology of investors or traders, secondary market participants, global economic culture, and companies’ potential. Having a strategy is essential when making trading decisions. 

A trading strategy might sound like a technical term. However, it is a simple summary of different considerations like: 

• Market Capital, 

• Technical Indicators, 

• Investment Style, 

• Fundamental Analysis, 

• Level of Portfolio diversification, 

• Industry sector, 

• Risk tolerance, 

• Holding period or time horizon, 

• Tax considerations, 

• Leverage.  

Most trading strategies are based on fundamentals or technical and consist of quantifiable information that can be back-tested for accurate decisions. These strategies are also periodically tweaked or re-evaluated according to investors' goals and market conditions to maintain their effectiveness. 

8 Different Types of Stock Trading Strategies:

1. Intraday Trading or Day Trading Strategy: 

 

As the name suggests, positions under this trading strategy are closed on the same day. Investors need to settle their securities—buy and sell—on the same trading day before the closing bell for stock markets hits. An intraday trading strategy is highly volatile and may require fast decision-making. 

2. End of Day Trading Strategy:

An end-of-day Trading Strategy is part of intraday trading. Securities are settled daily, but most orders are executed near the closing bells. Technical charts can predict the closing and the next day's opening. An end-of-day trading strategy might be suitable if an investor is willing to bear the overnight risk. 

3. Swing Trading Strategy: 

In a swing trading strategy, investors or traders use Fibonacci retracements, support and resistance levels, Channel trading, 10-—and 20-day SMA, MACD, and a few more technical charts to make short-term gains. Elliot wave theory is very significant in swing strategy. To execute this strategy, one needs to be an expert in technical analysis and have high predicting powers for market trends and activities. 

4. Position Trading Strategy/ Fundamental Trading Strategy:

Many people opt for this strategy. Investors do thorough fundamental research of the company and industry using different statistical formulas and then invest in shares anticipating multifold growth in the company, which will be reflected in their increased share prices. Investments are made for a longer time, for months or even years. Investors need technical and fundamental expertise to win with the strategy and gain from high prices over time. This strategy has a high chance of rewarding investors with high profits and involves less stress. 

5. Technical Trading Strategy: 

As the name suggests, a technical trading strategy is based on technical analysis knowledge. With the right tools and interpretation, traders can identify the entry and exit points. Any decision on nifty, Sensex or share follows the indicators of Moving Average (MA) ., EMA Exponential Moving Average, Relative Strength Index, and others. 

Under this strategy, there's no particular time limit for holding securities, which may range from days to months and sometimes years. 

6. Scalping Trading Strategy:

In this strategy, investors aim to extract profits from the most negligible trade with minor price changes, hoping that these small amounts will accumulate to a considerable profit. If planned with a disciplined exit strategy, scalping may help ensure profits in each trade. But, if any technical or fundamental aspects of this strategy are excluded, then gains may easily be replaced with losses. 

7. Trend Trading Strategy:

There are two trends in the stock market: bullish trends (when the market is at its peak) and bearish trends (when prices are falling significantly). An accurate system or knowledge base is essential to determining the movement, and if effectively done, it may help with immense success in stock markets. 

But risks and trends run parallel. Therefore, investors need a well-defined exit strategy with a trend trading procedure to settle in the bearish phase. 

8. News Trading Strategy:

News and events play an essential role in the stock market, as a short announcement can have tragic effects on prices. News Trading Strategy is based on market expectations and news, which may travel at the speed of light on digital platforms. 

Traders must have immediate news, updated details, and quick-decision-making skills to profit from this strategy.

How To Identify A Low-risk Trading Strategy?

Risks and stock markets are parallel threads, and one must address all the risks per trade factor before being tempted by the profits. Taking all necessary precautions before investing will elevate profitability, further associated with lower risks. 

However, risk-taking ability is personalized and may vary from trader to trader. Therefore, traders must continually monitor the market to analyze trends, events, and news. Holding time for a stock or share plays a significant role in determining its risk. 

Make sure you opt for an ideal strategy for your investment, considering the total funds you have, the amount you're willing to risk, and the period for which you are investing. Again, highlighting the importance of research and the basics, investors already well-versed in all the stock market basics will easily identify the low—and high-risk factors.

Tested and Proven Tips to Excel at Stock Trading Strategies: 

 

•   Knowledge is the Key to Profits: 

The Stock market is a vast universe; an investor must be well-versed in all the planets to gain accuracy. One might have expertise in day trading techniques and procedures, but they must also keep up with the latest stock market alerts, news, and events that might affect their investments. One should always have that intellectual strength from highly qualified trainers with the top Stock Market Course in Jaipur of NIWS.

All these events include the details of: 

• Interest Rate Plans, 

• Leading Indicator Announcements, 

• Federal Reserve's Systems 

• Financial, business, and economic updates. 

 

To gain expertise in stock trading, investors must always begin with a list of stocks and should regularly scan their updates. Stock trading learning is a never-ending process; you must update your portfolio and sheet with recent news and events. 

•  Set Aside Funds:

Investors must always decide, commit and assess the amount of capital they're willing to risk in daily trades. Successful traders risk only 1% to 2% of their trading accounts on each trade. 

This minimizes the chances of losses in day trading, and if occurred, the small portion can easily be covered with future profits. Therefore, designate a fixed surplus of funds for each trade and always be prepared to lose. 

•  Have Patience: 

Day trading and other stock market investment strategies require time and attention. Therefore, you must give most of your time and be patient with your holdings. Don't consider stock trading strategies if you have limited time to spare. 

Stock Market opportunities can arise at any time, and a trader must be completely aware of the market to spot them. The key is to move quickly and be aware of the events.

•  Initiate the Journey with Small Steps: 

Being a newbie in the market, start with a small process. Invest in two or three stocks in a session, as finding opportunities and trading with limited stocks is more accessible than a diverse portfolio. 

Fractional Shares have also recently become popular among traders. These allow you to specify smaller amounts you can invest with your Demat. 

• Timely Trades: 

Most investors think the stock market is at its best in the morning, as soon as it opens, and they start initiating their trades after that. However, the stock market's opening time reflects its volatility and high graph fluctuations. 

A seasoned player will use the morning opportunity to analyze and record patterns. This will give them the best chance for a profitable deal. The market's middle hours are usually stable and the best trade time. If you wish to hold the rush hour opportunity, you must sit until the closing bell, the safest time for beginners to trade.

•   Don't Risk Your Funds with Penny Stocks: 

A beginner usually looks for affordable and low-price deals, ending up with penny stocks. However, these stocks are generally illiquid and may not have a high chance of hitting the jackpot. Penny Stocks trade between Rs. 1 and Rs.10 and are often delisted from stock exchanges. 

However, some stocks listed between Rs. 9 and Rs. 12 are excluded from the penny stock category and may yield higher returns. So, do more research to identify such golden opportunities. 

• Market Orders VS. Limit Orders:

Market orders are executed at the best daily price and bear no price guarantee. In contrast, limited orders guarantee prices but have risky execution spots. In a limit order, investors decide the price and place orders simultaneously. Therefore, there is a chance that the market doesn't meet the quoted price, which will not fill the order, and investors will be unable to escape. 

Investors must decide the type of orders they'll use to exit or enter trades. For example, experienced investors or day traders opt for different option strategies to hedge their positions as stock market trading strategies. 

•  Don't get Tempted by Profits:

The stock market is highly volatile, and specific stock trading strategies may not always succeed. Most successful traders hit the jackpot in 40% to 50% of trades. They follow a rule of "gains on profitable trades > losses on losers, " which further ensures a profitable exit. 

Always hold a limited financial risk on trades and ensure that all the entry and exit methods are clearly defined. 

Conclusion:

The stock market may tempt investors with profitable opportunities, but an investor and trader's journey is more about losses than profits. Moreover, day trading is challenging to master as compared to other options. In this, a trader needs to exit from each day's trades, recording profits for the clients, and this requires discipline, skill, and time. 

Stock Market Trading Strategies may be proven to ensure profits, but they're useless unless you know technical and financial basics. 

If you're willing to earn profits through daily trades or want to seize profitable stock market opportunities, then the Stock Market Course in Indore by NIWS can be your saviour. The highly expert  and professional faculty will offer guidance on the share market from scratch, revealing their experienced tips to minimize losses.