What are the different trading strategies?
A trading strategy typically consists of three stages: planning, placing trades, and executing trades. There are lots of different approaches, including day trading, news trading, position trading, scalping trading, swing trading, and more.
What are the different types of traders?
The types of traders are very tied to the various trading strategies. For example, fundamental traders focus on company-specific events to determine which stocks to buy and when. Noise traders buy and sell without fundamental data specific to a company. Sentiment traders seek out trends, and market timers try to guess which direction a security will move. But arbitrage traders simultaneously purchase and sell assets in an effort to profit from price differences of identical or similar financial instruments.
Which trading strategy is best for beginners?
As a beginner, focus on a maximum of one to two stocks during a session. Following the trends is probably among the easiest strategies for beginners. Anyone who follows the trend will buy when prices are rising or short sell when they drop. This is done on the assumption that prices that have been rising or falling steadily will continue to do so.
How do I create my own trading strategy?
The first step into creating your own trading strategy is to determine what type of trader you are, your time frame of trading, and what products you will trade. It is best to see how an asset performed in the past by looking at historical data and charts around the time frame to be traded. Jot down your ideas and then start backtesting them.
Nash equilibrium is a concept of game theory where the optimal outcome of a game is one where no player has an incentive to deviate from their chosen strategy after considering an opponent's choice.
A white paper is an informational document usually issued by a company or not-for-profit organization to promote or highlight the features of a solution, product, or service that it offers or plans to offer. White papers are also used as a method of presenting government policies and legislation and gauging public reaction.
Random Walk Theory
Random walk theory proclaims that stocks take a random and unpredictable path that makes all methods of predicting stock prices futile in the long run. It considers technical analysis and fundamental analysis undependable.
Portfolio turnover is a measure of how frequently assets within a fund are bought and sold by the managers. It is calculated by taking either the total amount of new securities purchased or the number of securities sold (whichever is less) over a particular period, divided by the total net asset value (NAV) of the fund. It is usually reported for a 12-month time period.
A dawn raid refers to the practice of buying up a large number of shares right at the open of the day's trading. The goal is to amass a large number of shares in a target company by one company to influence a potential takeover of the target. Due to the rapid dissemination of price data and exchange and securities regulations, it is difficult to achieve.
In and Out
In and out is a trading strategy whereby a single security or currency is bought and sold multiple times over a short period. In and out trading can last for a single trading session, or it can last longer but less than the period associated with a buy and hold trading strategy.