Day Trading Terms That Every Investor Should Know

Most day traders leave their positions before the market closes to avoid the unmanageable risks that may exist between the closing price of one day and the opening price of the next day. Here are some day trading terms that investors should know before trying to take on the market.

Trending and Contrary

Trending is a strategy used in every period and, if the financial instrument has been following a positive path, the investor should continue with the same trend. Contrary consists of choosing the right moment and synchronizing with the market no matter the time of day. It assumes that the financial instruments that have been constantly appreciated will reverse and begin to fall and, conversely, those that have been falling will begin to appreciate.

Scalping

This strategy helps to locate small differences in the price between what is offered and what is used by the speculator for his or her benefit. It normally involves entering and exiting a position quickly, usually within minutes or even seconds.

Rebates

Uses reductions as the primary source of benefit. Traders try to make their money from these rebates and will generally maximize their income by trading in high volume and low-priced stocks.

Rank

This is a trading strategy that observes a stock that has been rising from a specific price of support or that has been lowering from a specific price of resistance. That is, every time the stock touches the price above, it falls back to a low point, and vice versa. It is then said that such an action “operates within a variable range”.

News

This is the domain field of the day trader. The basic strategy is to buy stocks just by announcing good news and selling or selling short with bad news. These events bring with them great volatility and, thus, the opportunity for rapid gains or losses.

Price action

A combination of price momentum, patterns in the charts, volume and other market data. Special emphasis is placed on technical analysis but not on its conventions indicators. It requires preparation and an understanding of various markets. For more details, visit Rockwell Trading Services on Facebook today.