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Kavan Choksi Wealth Advisor lists a Few Popular Short Term Trading Strategies

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Short term trading involves opening and closing positions within a short timeframe, typically a few days or weeks, even though it can be even shorter. As Kavan Choksi Wealth Advisor says, this trading approach is particularly popular among institutional and retail traders who aim at profiting from small term trends and price movements.

Kavan Choksi Wealth Advisorunderlines prominent short term trading strategies

Short term trading tends to focus on the fluctuating price action of a financial instrument for quick profits. On the other hand, long term trading puts emphasis on more fundamental components, and helps traders or investors to make steady returns over a longer timeframe. Broadly speaking, short term is known to be a more speculative investment type in comparison to the traditional buy and hold approach.

Here are a few common short term trading strategies:

  • Scalping: Scalping is an extremely short term trading strategy. Traders following it aim to enter and exit positions in a matter of a few seconds or minutes. Scalpers commonly carry out hundreds of transactions on a trading day in order to try and make a good amount of profit. Traders using scaling strategies typically put emphasis on price action and technical analysis, and do not take elements of fundamental analysis into account.
  • Day trading: Day trading is likely to be the most popular trading strategy, and can be used for almost any financial market or asset class. Day traders tend to buy and sell multiple instruments throughout the day with the goal of closing out positions before the market shuts. They do not carry positions overnight. Day trading provides a balance between extreme short term strategy like scalping, and a relatively longer term approach like swing trading.  Day traders make use of hourly charts for the purpose of analyzing price data, as well as spotting recent emerging or declining trends to decide whether to buy or sell a financial instrument. If they see that their chosen market is moving in an unfavorable direction, day traders usually exit positions fast to steer clear of losses.
  • Swing trading: In the case of swing trading, the traders hold open positions for multiple days or weeks. These traders typically examine the swing highs and swing lows of the price of an asset for the purpose of assessing whether or not it has upcoming potential for profit. Swing trading strategy generally involves careful prediction and forward thinking.  Swing traders try to predict when and where the price is likely to move next prior to entering the position, and then ride the ups and downs of the asset. These traders might just close the position when it does not seem to be following the same pattern anymore.

As per Kavan Choksi Wealth Advisorshort term trading can be both risky and lucrative. Depending on the strategy and approach chosen, these trades can last from as little as a few minutes to as long as several days. To succeed in short term trading, one must effectively understand the risks and rewards of each trade.

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