Active Trading
Active trading is the buying and selling of securities for quick profit based on short-term movements in price. There is no definite time measurement for active trading. Active traders typically use a high volume of trades to make profits, since the price swings likely to occur over the short term tend to be relatively small. A stop-loss order helps keep losses manageable if the price moves against the trader. To capture a favorable price, the active trader may use limit orders.
ACTIVE TRADING STRATEGIES
NOTES
- Day traders, scalpers, and swing traders are all considered active traders; Scalpers and day traders are more active than swing traders.
- Active trading seeks to profit from price movements in highly liquid markets; Active traders generally focus on stocks, foreign currency trades, futures, and options with lots of volume which allows them to get into and out of positions with ease.
- Since active traders traders within short periods time, fundamental or economic aspects typically don't play a role in the traderss.
- Technical and statistical analysis play a bigger role, with many active traders trading based on price action or technical indicators or concepts.