There are many different ways in which investors try to make good decisions and maximize their investment results. Here is a summary and review of some common stock trading strategies to consider.
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Trend Trading – This trading strategy is based on researching and identifying stocks which move in a direction with a degree of strength.
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Hot Stocks – Finding out which stocks to buy based on how "hot" they are at the moment. This can be based on current news or product introductions the company may have made, etc.
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Penny Stock Trading – This strategy entails trading stocks with a low market capitalization and which are normally priced under $10.00 per share.
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Insider Trading – A strategy which involves researching stocks based on major insider transactions which are filed with the SEC.
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Short Stocks. This entails profiting from a stock when it declines. Shorting has gotten some bad publicity but it is actually a tried and true strategy which can derive good profits for investors.
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News Trading. This type of trading is more geared towards day trading and is based on real time news reports related to the company.
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Gap Trading. Trades are placed at the extremes during opening trading. Investors try to profit from this as the stock price reverses to fill the gap during a given trading period.
Strategies for Extended Hours Trading
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Pre Market Stock Trading. This is a strategy often used in day trading. The pre market trading hours are 7:30am to 9:30am and this trading is often done along with news trading. The hours available for pre market trading can vary depending upon your broker.
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After Hours trading. This strategy is also common to day trading activities. The after hours trading normally runs from 4:00pm to 8:00pm and the availability can vary depending upon your broker.
Other Trading Strategies
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Dividend/Income stock trading. This strategy is popular with long term investors who seek steadier dividend payouts rather than appreciation in stock pricing.
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Elliott Wave Principle. This trading strategy is based on a theory which predicts stock price movement based on the level of optimism or pessimism over a period of time. As these movements progress, patterns can be uncovered which helps investors to determine optimum times to purchase or sell stocks.
There are many other trading strategies but this should provide you with some of the more common stock trading strategies to consider.
