Deciding when to sell is a key element to being profitable when Day Trading.
There are many ways for you to approach an exit and come out in a winning position. Four ways to do this is to use profit targets, daily pivots and momentum.
The most commonly used exit method is probably using profit targets. When using profit targets, you are exiting at a pre-set level.
There are strategies to help when choosing profit targets. Of these strategies, Scalping is the most used. When scalping you are selling right after the trade becomes profitable. The Profit target when scalping is whenever the trade begins to make you money.
Another strategy using profit targets is Fading. Fading is involving shorting stocks right after they begin to take an upward turn.
When using this technique, you are assuming three things. First you assume the assets overbought. You also must assume that those who bought early are ready to take their profits. Last, assume that those who are currently buying may be scared off the trade.
Fading is a risky strategy but can really pay off when successful. What you are watching for when implementing this selling strategy, is signs that the buyers are stepping back in. This will give you your price target.
Daily Pivots is our next usefully strategy when deciding when to sell. Daily pivots is benefiting from the asset’s volatility.
Profiting from Volatility is achieved by buying when the price is the lowest and selling when the price is at it’s highest point. You’re price target when using daily pivots is when you see a reversal begin.
Using Momentum of a trade can be very beneficial for traders. This involves research. Knowing which trades will be trending and popular puts traders ahead. Reading news articles and staying up to day on current events will help you know which way the market is moving and allow you to strategize successful trades.
One way to trade using Momentum is to buy based on news releases and then sell when the trend turns. There is also another popular way to trade using momentum. This is to fade a price surge. When fading a price surge your price target is when the volume of the asset begins to lower.
Defining a strategy when deciding when to sell is important. Your strategy should be repeatable and tested. This will lead to success when Day Trading.