Day trading has become popular in the past few years. Millions of retail and institutional traders trade every day. However, the The market is always changing Because it goes through many events.
For example, in 2008, the main topic was the global financial crisis (GFC). In 2020, the main theme in the market is the Covid-19 pandemic.
These are key events that are easy to spot, however Market conditions change regularly (without very clear indications). In this article, we will look at how to create strategies for all seasons of the market.
Find a news trigger
An important concept that works all the time in day trading is a News Catalyst. Stocks tend to You react differently when there is a major news event. For example, they tend to go up sharply when there is positive news and then fall sharply when there is negative news.
There are two main types of news triggers in the market: unexpected and surprising.
was expected newsletter is what the market expects. For example, traders use the earnings calendar to predict when companies will publish their quarterly results. The chart below shows what the earnings calendar looks like.
In addition to the earnings calendar, there are other types of calendars that show expected news. Some of these are:
- Economic calendar – This is the type of calendar that A schedule of economic events appears that are scheduled to occur. Some of the most important examples of events in this calendar are interest ratesAnd the inflationAnd the Careersand retail sales.
- Dividend calendar – This is the calendar that shows when companies will pay their dividends.
- division calendar – This is the calendar that shows when companies will split their shares. A split is a period in which a company reduces its stock price and adds the number of shares outstanding. The goal is to make stocks affordable.
- Underwriting calendar – This is a calendar that shows companies that are set to go public in a given period.
The other type of news trigger is sudden. This kind of news Can’t be expected. A good example of this is when Elon Musk tweeted that he was getting on Twitter. While he has already become a shareholder, no one is expecting direct takeover news.
Other common types of sudden news events are a short seller’s report, a sudden management change, a merger and acquisitionNew product launch and part disposal.
Trading with the news trigger is relatively easy. In most casesa stock with important news such as earnings and mergers and acquisitions will mostly have a larger size.
For expected news such as earnings, you can use pending orders to take advantage of them. For example, if a stock is trading at $10 and posts earnings after the market closes, you can place a pending order.
In this case, you can put Buy stop at $11 and sell stop at $9 Then protect them.
If earnings are positive and the stock goes up, a buy stop trade will be triggered. On the other hand, if the earnings are negative, the Sell Stop trade will be triggered. This is it One of the simplest ways to use.
Another strategy for trading in all market conditions is to look at price experts in the morning. A gap is a situation in which a stock opens sharply higher or lower than where it closed the previous day. A good example of this gap is shown in the chart below.
The morning gap occurs for several reasons. In most cases, it happens after a major event when the market closes. For example, big events like geopolitics can lead to a morning gap. A gap, like the one described above, can occur after a company posts poor results.
So, how do you trade the gap? First, you need to Find stocks that are showing big moves before the market opens.
You can do this easily with tools like Investing.com and WeBull. The chart below shows pre-market gainers and pre-market losers.
After, after find pre-market gains, You must work to find out the reasons for this They trade like this. A Google search can easily show you why stocks are moving in this direction.
there Three main approaches To trade the morning juniors. Or not, Based on the reason As for the movement, the arrow can continue in the direction of the gap. secondly, She can unite for a while after a gap. finally, The stock can start a new trend in the opposite direction.
Market sentiment and trend following
Another trading strategy that works at all times is to follow the trend based on market sentiment. The idea is that Traders should focus on the overall market sentiment.
This means buying stocks when things are going well and selling short when they are not doing well. Doing so will increase your earning potential.
Traders use several ways to use this strategy. Good one is Use a very short term chart Then combine it with a trend indicator like VWAP.
For example, a buy trade is triggered when the stock moves above the VWAP indicator. On the other hand, a downtrend appears when it moves below the VWAP, as shown below.
In this article, we have focused on some of the best strategies that will help you make money in all kinds of markets.
The idea is that you should focus on companies that are making some strong moves in the market and then use indices to trade.
Useful external resources?
- Are there trading strategies that work well in all (ie strong) market conditions? – Quora