Trading guide

Active trading is all about capitalising on short-term market trends. Unlike long-term buy-and-hold traders, active traders believe the best route to profits is to buy and sell securities on a short-term stock chart.

There are lots of strategies you can use as an active trader, but before you put one into practice, make sure you know each one’s risks, costs and ideal environment.

Day trading

One of best-known strategies, day trading has become synonymous with active trading. With this strategy, no position is held overnight – securities are bought and sold within the same day. In the past, this strategy was almost exclusive to professionals, but with online platforms such as Q8 Trade, traders of every level can benefit from day trading.

Position trading

Lasting several days to several months, position trading – or trend trading – uses longer term charts to predict the current market direction trend. How long the trade last depends on the trend. Some people think this doesn’t qualify as active trading, but if executed by an experienced trader, it can be.

Always looking for successive higher highs or lower lows, trend trades ride the wave and aim to benefit from both the ups and downs of market movements and shy away from forecasting price levels. These traders typically jump on an established trend and then close the position once the trend breaks. That means if the market is more volatile, trend trader is harder and there are fewer positions.

Swing trading

Swing traders pounce when a trend breaks and price volatility sets in. These traders typically hold positions for more than a day, but for less time than trend traders hold their positions.

Often creating a set of rules based on analysis, swing trade algorithms are designed to identify when to buy and when to sell a security. Algorithms don’t have to predict the exact high or low of a price movement, but they do need a market to move in one direction. Sideways or range-bound markets are risky for swing traders.

Trading strategy costs

Active trading has long been associated with high costs – significant hardware and software purchases, plus access to real-time market data, were barriers to entry for many. As well as that, in-house brokerages enjoyed lower commissions and better executions deemed essential for maximum profit potential.

But now you can get in on the action too. Q8 Trade’s cutting-edge trading platform is the fastest and most powerful in the industry. When you trade with us, you can access the same real-time market information and expert tools that professional traders use every day, so you can maximise your profits as an active trader. With Q8 Trade, you have the Power to Grow* as an active trader.

 

 

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