Different people approach the stock market with the different frame of mind. Some want to trade in the intraday market and others have swing trading as their favorite. People use fundamental and technical analysis to gauge the market. Also, some people follow strategies which are useful in trading in the intraday and short-term market. Some of the important intraday strategies are discussed in this article:
- Breakout Strategy
- Gap Strategy
- Spread Technique
In the breakout strategy, the market is first watched in the initial hours. After watching the market in the first hour one can mark the high and low in this first hour. Then the breakout from this range of high and low is watched. If the breakout is obtained from the high an uptrend is anticipated and if the breakout occurs from the low a downtrend is supposed to continue. Thus appropriate buy and sell positions can be taken on the breakouts. This strategy is based on the fact that during the initial hours of trading there are market fluctuations. As the time passes the trend begin to form. Thus appropriate buy and sell positions can be taken after the trend has been formed.
In the gap strategy firstly a gap is identified. The gap is the difference between the last day’s close and today’s open. The gap can be positive, Negative, with the high magnitude and with low magnitude. Thus based on the gap and its magnitude an appropriate position is taken in the market. The gap strategy is favorite of many traders. The gap strategy has appeared to be useful in the past.
The spread technique is the act of buying and selling at the same time. The difference between the buy levels and the sell levels is known as the spread. The spread technique can be applied to the two different stocks in the same market, two stocks in the different exchange, one entity in the future segment and one in the cash segment. The spread technique gives the trader the width of spread as the profit. The wider the spread the more is the benefit to the trader. The spread technique in some cases is also known as hedging.
The different strategies are also followed by the technical analysts in the advisory firms. Money Classic Research is one such advisory firm which provides accurate stock market tips in the form of buy and Sell calls with proper stop loss levels.