How to achieve quick profits through short-term trading?Many friends enjoy short-term trading, mostly due to the short holding time, quick results, and the thrill of the process. However, short-term trading is the most challenging among all trading methods and requires careful consideration.
Today, I will share my early experience of short-term trading with you. Specific methods and strategies will be provided in the later part of this article, which are closely related to practical applications and, I believe, will be helpful for you.
The article is quite lengthy. If you find it helpful, please give it a thumbs-up at the end of the article. Thank you.
Advantages and disadvantages of short-term trading
Short-term trading does not have a strict definition standard. When the market moves quickly, positions can be closed within a day, but if the market moves slowly, it may take two or three days to close the position, all of which belong to short-term trading.
On charts, I usually consider trades at the 5-minute, 15-minute, and even 1-hour level as short-term trades.
The advantages of short-term trading are:
(1) Short holding time and quick results. People are naturally curious about the unknown and want to know the results quickly. Short-term trading fits human nature, making it easier to control emotions.
(2) High trading frequency, providing a thrilling experience. Many traders are restless and want to trade multiple times a day, short-term trading meets this human need.
(3) The decay cycle of the short-term trading system is short, and the distribution of trading results is more evenly distributed, making it easier to execute. Sometimes, even with a losing streak of 5 times, the long-term trading strategy may take over a month to recover, while the short-term trading strategy may only take two or three days. Thus, short-term trading is less torturous to human psychology during a losing streak.
Disadvantages of short-term trading:
(1) High trading frequency requires more time and energy and is not suitable for part-time traders.
(2) Frequent trading generates high trading costs. Therefore, short-term traders need to pay attention to their commission fees. I have seen many futures traders who have had their accounts charged two or three times, or even ten times, the commission fees. How can they make a profit like this?
(3) Requires higher professionalism and attention to trading details. Short-term trading is more sensitive to changes in the market. Sometimes, when the market changes, you don't have much time to think and must act decisively. People with more procrastinating personalities are not suitable for short-term trading. Additionally, the margin of error for short-term trading is relatively low. Long-term trades do not require very precise entry points, and being off by 5 or 10 points does not have a significant impact on the overall trade. However, in short-term trading, being off by 5 or 10 points can be the difference between profit and loss.
Therefore, short-term trading is a delicate operation, and all trading details must be clear and easy to execute. Short-term traders also need to possess qualities such as attention to detail, boldness, calmness, and decisiveness.
So, how can you quickly profit from short-term trading? Next, I will share two strategies.
2.Plan One: Choosing Volatile Markets with Large Amplitude for Short-term Trading
As a short-term trader, we only need to capture a small segment of market volatility, and it doesn't have to be the overall trend, as long as the market volatility is fast and the amplitude is large.
The faster the market volatility and the larger the amplitude, the easier it is to make profits. For the same 100-point profit, it may take only one day to achieve it when the volatility is fast and the amplitude is large, while it may take several days to achieve it when the volatility is slow and the amplitude is small, resulting in a much lower trading efficiency and different challenges to our mentality.
Therefore, the amplitude of the product is the key to making profits in short-term trading. We need to selectively engage in short-term trading and not try to swallow all profits. There are two specific strategies to consider.
Strategy One: Directly select high amplitude products for short-term trading.
Different products have their own characteristics when operating in the market. Some products have fast volatility and large amplitude, while others have slow volatility and small amplitude. Before engaging in short-term trading, we must select the most suitable products.
For example, in the same breakout trading opportunity, products with high volatility and larger amplitude can achieve greater profits more quickly.
As traders, we all understand that the faster we can lock in profits, the more confident we feel. Therefore, selecting the right products makes short-term trading easier.
Moreover, if you choose a slow-moving product, your holding time will be longer, and your position may be occupied, which will reduce the utilization rate of your funds and affect the final profit. Short-term trading is about paying attention to details and maintaining a strong mindset, as even the smallest details can determine your success or failure. Therefore, do not be careless.
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Traderender
What is the ultimate level of stop-loss in trading?
For trading in stocks, futures, or forex, stop loss is a part of the trade. It only works effectively for investors if it is included and adhered to in every transaction. As we all know, stock investment requires three basic skills: stock selection, stop loss techniques, and profit-taking strategies. However, many investors do not pay enough attention to stop loss and profit-taking techniques, and ultimately regret not setting stop loss and profit-taking points. Today, we will introduce the highest level of stop loss techniques.
First, the comprehensive stop loss method is the highest level of stop loss for stock investment. Therefore, when setting the stop loss point, the overall situation must be taken into account. There is no stop loss method that exists separately from the investor's overall operation. If the stock market develops beyond the investor's ability, it means that the stop loss measures must be implemented.
Second, the highest level of stop loss is in the heart of the investor. When selling stocks, investors should not only rely on their eyes but also observe and analyze with their hearts. Many stock investors only believe in what they see when selling stocks. As a result, they often miss the selling opportunity when they finally realize the situation.
Third, the stop loss method based on consolidation time. If an investor buys a stock with a heavy position, but the stock price does not rise much after buying, and it starts to move sideways after a period of time, it is important to note that if the consolidation time is too long, it means that the main force cannot use funds to boost the stock price.
Fourth, stop loss based on real-time trends. If the main force of a stock has been washing the stock for some time and still has not controlled the stock when it is time to do so, it means that the main force has no intention of raising the stock price, and the future outlook is pessimistic. At this time, investors should take timely stop loss measures, otherwise, they will end up suffering losses.
Fifth, stop loss based on trading volume. If an investor encounters a stock that is severely oversold, and many investors are trapped at a higher price, it is time to sell the stock. However, sometimes, observing the daily k-line chart, it is found that there has been a huge increase in trading volume in recent days. Note that this is a trap set by the main force to lure retail investors.
In summary, the above is the relevant knowledge about stop loss techniques that we introduce to stock investors, hoping to help our friends in the investment field.
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5 TRADER'S MISTAKES IN TECHNICAL ANALYSIS AND PRICE ACTIONThe ability to interpret candlestick patterns and patterns gives us the key to understanding price movements. Once you learn how to read charts, you can trade any instrument in any market.
From a technical point of view, everything seems to be as simple as possible. Why then most traders can't get stable profits? Of course, everything can be put down to lack of experience or an inoperative trading strategy. Trading psychology also plays a big role. Many problems arise due to lack of patience and discipline. Traders often tend to overcomplicate their market analysis.
I have therefore compiled a list of the five most common mistakes in technical analysis and price action:
1 MISTAKE - LEVELS ARE DRAWN BY CANDLESTICK BODIES, NOT BY THEIR SHADOWS
Cutting off candlestick shadows when making key levels is one of the most common mistakes.
Notice the picture to the left - how the levels on the chart cut off several candlestick highs and lows. When you cut off candlestick shadows in this manner, you limit your ability to successfully trade on trend lines. Not only will you have difficulty identifying the breakout, you will also have difficulty identifying the right entry point.
Now take a look at the chart to the right - here is an example of how we were supposed to draw a channel, how perfectly the support resistance levels match the highs and lows of the candlesticks.
The difference between the two charts above may not seem like much. But all the nuances lie in the details.
2 MISTAKE - TRADING ON PRICE PATTERNS WITHOUT CONFIRMATION
Being able to find price action patterns is great, but the patterns themselves often mean nothing.
Many traders try to trade price patterns and patterns before they have even formed, hoping to enter the market at the best price.
3 MISTAKES - TRADING ON SMALL TIMEFRAMES
Most traders want to make trades and profit every day. However, professional traders know how important it is to stay out of the market and wait for the right trading opportunities. They are extremely selective in opening trades and risk their trading capital with utmost caution.
Most beginners prefer lower timeframes, because then they have the opportunity to trade more often. They believe that the more trades they make, the more money they can make. But in trading more trades doesn't mean more money.
When it comes to technical analysis, the big timeframes will always give better signals. In doing so, they filter out most of the market noise. In other words, they smooth out price movements. This is especially true during periods of increased volatility.
4 MISTAKE - IGNORING SUPPORT AND RESISTANCE LEVELS
I am referring to key levels that have been formed by the market regardless of the pattern you are trading.
By being aware of all critical levels in the path of price movement, we can make decisions to close or hold a position based on logic rather than emotion.
Therefore, always mark support and resistance levels first before entering the market.
5 MISTAKES - TRADING ON BAD OR UNCLEAR PATTERNS
What do I mean by bad or unclear patterns?
In a nutshell, they are patterns that are not immediately apparent. If it takes you more than a couple of minutes to find a pattern on a chart, it's probably not worth trading.
Even if you have only been trading for a month and haven't yet studied all of the price action patterns, you should still be able to find price patterns in minutes.
