The 5 Different Trading Techniques for the Technical Trader


A Technical Trader relies on technical analysis to make suitable trades. However, even though they rely on historical and empirical data, they also make use of other trading techniques as well. Below are just some of the most commonly used tactics by the technical trader.

1. Day Trading

You’ve probably heard of this term before as it is quite popular nowadays. Day Trading involves the buying and selling of investing on the same day, although there are some cases where the day trader may hold the stocks for a couple of days.

They typically enter and exit on the same trading day, taking advantage of minor price changes that may occur. The typical trading day starts at 9:30 in the morning and ends at 4 in the afternoon. During that time, the day trader would buy as many shares as they can, provided that they exit their positions before the trading day ends.

It is important to note that day trading involves holding their positions for minutes and hours. This is an important distinction because the next trading tactic is a bit similar to this one.

2. Scalping

Also known as Micro Trading, Scalping is pretty much the same as day trading, only that they make really high volumes of trades.

If the day trader holds positions for minutes and hours, the scalper holds positions for only seconds to a few minutes. The typical number of trades being conducted by the scalper on a daily basis would be anywhere between 10 and 100. That is a lot of trades!

What I love about scalpers is that they are the ones who closely monitor any price
movements no matter how minute they are and they will immediately take positions to acquire stocks.

3. Position Trading

Unlike the previous two, Position Trading is more concerned about making small-sized trades and holding the position for a longer period of time. How long? We’re talking about a span of weeks or even months!

Position traders rely on long-term market movements. They believe that even though the market is erratic and price movements fluctuate wildly, there will be a time where the price movements are generally in the same range.

4. Swing Trading

Speaking of fluctuation, Swing Trading relies on a general “swing” in the market
movement. Basically, they are more concerned about holding onto stocks for a couple of days until a suitable “swing” in the market movement happens.

After which, they will make their entry and exit positions accordingly to take advantage of this.

5. Momentum Trading

Sometimes, a particular stock “breaks out” wherein their prices move above or below their resistance levels. This is called a “momentum shift” and people who take advantage of this are known as Momentum Traders.

They are very keen on spotting stocks that are generally moving in only one direction and that those stocks are in high volumes as well. Momentum changes can last for a couple of hours up to a few days.

Author: Martin Lane