We have presented strategies several times based on indicators and market technology. Most related to trading indices, currencies or commodities. Today we want to see how single values can be traded.
The advantage of single values is that there are several and traders only have to look for the desired setup. However, there are a few more things to consider when trading stocks. The following steps outline a strategy structure that every trader should understand as a framework and accordingly develop their own strategies from it.
Preparation for the trading week
It is recommended to first look for interesting values on the weekend and separate them into long and short or call and put. The trader should already be using his valuation methods, so know when a value might be of interest to him or not.
This can be the case if there is a strong trend. How you identify it is up to you; Traders can use moving averages or simple trend lines. Everyone has to decide for themselves. When this step is done, the following things should be checked for the coming week:
- Economic Calendar
- Industrial Sector
The economic calendar is important because it informs the trader about important events in the coming week. Relevant economic data should always be observed.
The entire industrial sector should also be considered. This is important in that it helps to find out which sectors are currently doing well and which are doing poorly. Sectoral strength can act as fundamental support in trading individual stocks, and finally the charts, a trader's trading tool. It is definitely advisable to get a notepad or daily calendar and always write down the relevant things. During trading, traders often no longer think about their analysis, but are emotionally bound.
After the preparation, equity screening can begin. The trader should stick to his entry strategy. The rules could be, for example, the following:
- There is a trend
- The trend has a correction or a pull-back.
- The correction is at an important support or resistance level.
- There is relative strength.
The upper chart shows the stock price of the company Renault SA This share can also be traded with the broker OptionFair. A strong trend is indicated by the three moving averages - the first point is met. A correction is currently also available. The 20 moving average (yellow) is currently considered support, point two is therefore also fulfilled.
However, it is striking that the relative strength is not very favorable. The RSI indicator shows a declining structure. The double top also indicates relative weakness. The third point was therefore not completely fulfilled, which means that the share does not seem to be interesting for the time being. Since this share is not an option, the search continues. Traders trading swings, d. That is, if you want to hold your positions overnight, you should also keep an eye on the upcoming news for the individual stocks. An overnight gap is not too nice, and a stop loss only takes effect after the stock exchange opens. In this case, trading binary options is advantageous.
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Preparation and planning are a trader's best friends. This also applies to trading individual shares. It is advisable to prepare yourself on the weekend and look for interesting trading options. Since you are concerned with your emotions during trading, the analysis usually falls by the wayside.
Traders should remember that it is also a positioning in the market and a strategy to keep cash. If, as shown in the example above, there is no good opportunity, it is advisable to hold cash and postpone trading until there is a chance. The broker OptionFair offers a large selection of stocks, which will surely be some Let opportunities be found each week.