How To Kick Off Short-Term Trading

Short-term trading basically refers to a trade in which the duration between the entry and exit is within a few seconds to a few days. It focuses on price fluctuations and not the long-term fundamentals of a share. As intriguing as it may sound, its volatility can be skeptical. By the time you react to the up or down in the market pertaining to any stock pick recommendation, the market may already have changed.

How to start short-term trading

• Decide what type of short-term trader you’ll be
• Research your market of interest thoroughly
• Stabilize your strategy
• Open an account to trade in live markets

Types of short-term traders

1. Scalpers

They tend to make profits from slight fluctuations in the market within seconds to minutes, usually not longer. They’ll exit the trade as soon as the market shifts in their favor. These traders generally don’t believe that profit pulls profit. They cut the profit out of the deal and exited. This sounds easy on the one hand as it retains a high profit-to-loss ratio, but on the other, it demands constant monitoring. Part-time traders are not fit for this type of trading. One thing to keep in mind is the cost of entering and exiting a stock. This should not rot your profits.

• Day Traders

They buy and sell stocks within a single trading day. This chops out overnight charges. Traders take advantage of small shifts in the value of stocks throughout the day. Day traders should be able to make quick decisions to avoid risks due to slippage.

• Swing Traders

This type of short trading is debatable, as it may last from several weeks to even longer. Traders keep an eye on the trend of rising and fall within the overall price movement.

Markets where you can trade short-term

• Forex

The most popular short-term trading market due to two reasons:

1. High volatility which gives several opportunities to traders within their range to carve the profit of their desire
2. A genuine liquid that makes entering and leaving the market fluent

• Cryptocurrencies

The most captivating thing about this market is its 24×7 operating time. It procures plenty of opportunities for short-term traders to make a profit. Even its volatility, like bitcoin, creates engaging market movements.  The theory of knowing your market fully before entering into it and how to trade holds more relevance in this market as it is comparatively newer.

• Commodities

This opens a window to a short-term view on a wide range of commodities such as gold, silver, or sugar. While trading commodities, you are entitled to pay funding charges for holding assets overnight.

What is Slippage Slippage is a crucial factor to eliminate while trading short-term. Slippage simply means the difference in the price of the asset when you sell an asset, and when you were supposed to sell it. For example, within the time you decided to sell your asset, and you sell it, if the price goes down, then it is known as negative slippage. This will reduce the profits you thought you would make on exiting this trade. To avoid slippage, you need to look for a trader that can, along with providing the right share tips and investment tips, act quickly enough and be invested in your trade by all means.