Nowadays, trading stocks is a phenomenon that is taking up the attention of many people. Many people can make a living by trading stocks, but many more lose their money.
One of the reasons why so many people suffer losses in their stock trading is because they were not aware of certain factors that can determine whether or not an investment will do well. For example, did you know that if you trade within 30 minutes after market opening time, your chance of making profits increase by 6%? Not only this but there are also other little-known techniques used by the top traders that can give them an edge over other traders. Try these techniques with Saxo.
Avoid trading when stocks move in one direction
Another technique used by top stock traders is to avoid trading when the price of a stock moves in one direction more than 1%. You may be wondering why this matters and why the numbers mentioned are relevant. The reason behind this is because if a trader were to buy a particular stock when its price was high, then sell it on when its price fell significantly, they would not have been able to exploit the rise from their initial purchase. Many people lose money on trades where they do not receive enough price increases to decrease the price.
Be aware of the closing time
It does not mean that traders are staying up late at night, but it means that they are looking closely at the market’s closing time. If an investor were to buy stocks just before their market closed, there would be no way to benefit from any growth during overnight hours. A suitable method for determining which stock you should invest in is by observing whether or not it has performed well during its daily trading period. However, this must be done whilst also considering its profit potential over more extended periods (one week, one month etc.). Another reason why top traders avoid investing right before markets close is that they are aware that the price of stocks tends to drop drastically right before closing.
Plan your trades by drawing support and resistance lines
This technique is effective because it allows traders to visualise their potential gains and losses. If you want to make the most out of the Australian stock market, then taking this tip into account will allow you to do so because it can help you determine whether or not a trade will be successful within minutes. It is important because if a trader were to go on too long without planning which trades would work best for them, they could lose focus, and as a result, all of their money couldn’t be lost in one fell swoop. For those interested in learning how this works, draw an upward-sloping line on a chart to represent the support level and draw a downward sloping line for your resistance level. You can add points on these lines by plotting what price levels you expect to encounter during your trading day, then connect them with a straight line going through these points.
Avoid trading when the market is quiet
This tip is relatively straightforward because it means that you should avoid trading when there are not many stocks being traded or bought and sold frequently. If a stock does not have much activity from buyers, the chances are that its price will remain stagnant throughout the day, making it harder for an investor to make profits from their trades. During these times, traders tend to trade whatever stocks they want, no matter how undervalued or overvalued. It is a common mistake that many traders make because it leads to them losing money on trades where the price of a stock does not increase enough to compensate for its initial purchase.
When in doubt, stay out
There may be occasions when you have an excellent view of how stocks will perform, but you remain hesitant from making trades because of uncertainty. It is best to avoid placing trades in situations like this until any uncertainties have been cleared up. It can lead to you poorly performing if there is no uncertainty, and as a result, your decision turns out to have been beneficial just as much as it would have been had you made the trade.