Whether you’re new to trading or have been around for a while, you’re probably wondering whether there are any tried and true ways to improve your brokerage account with savvier trades. The good news is that some of the oldest techniques are often the best of the best. Not only are they simple to use and time-tested, but they’re equally easy to understand. That’s a much more crucial point than most people think. Far too many traders use dozens of technical indicators, math programs, and sophisticated apps but end up losing sight of the main thing they’re trying to predict, price. Here are several relevant, useful, and simple tactics that you can start using right now. No tricky math or heavy lifting required.
Follow the Major Trend Direction
The old KISS principle is alive and well on the trading floor and at computer terminals all over the world. It shows up in trend-following techniques. The beauty of using 50-day and 200-day trend lines is that they’re utterly simple to comprehend. When the short-term line crosses above the long-term one, then your security is in a general uptrend. The way the rule works is to never go long when a chart shows a downtrend in effect. Likewise, never go short when there’s an uptrend taking place.
Buy Before the Market Opens
Many people like to get their orders in as early as possible to take advantage of a possible overnight news headline or other development that might affect the price of a security. If you want to give premarket stock trading a try, you can place orders from 4 a.m. to 9:30 a.m. Eastern Time, which is before the normal session begins. Much of the action that takes place in the wee hours is institutional, but individuals get involved as well. Some have jobs that don’t allow them to place orders during the regular session. Others want to get their orders in to take advantage of a possible large upswing or downswing in price based on late-breaking news.
Use the DCA Investment Strategy
If you really want to remove the emotional element from your buying and selling, use the dollar-cost averaging method to make cyclical purchases of stock or other securities. Many working adults employ the DCA strategy to build portfolios slowly and steadily. How does it work? You invest the same amount of money each time to make a buy, whether it’s every week, month, or quarter. A common DCA approach, for example, is to regularly purchase X amount of a given stock, group of securities, metals, or any other asset. You don’t vary the amount you spend even if the prices of the assets you buy has gone up or down.
Know the Times to Stop Trading
A common mistake that beginning and experienced traders make is not knowing when to get out of the market. Sometimes it’s best to just stop and look at the big picture for a while. When should you get out? Consider doing so when volume dries up, you need a mental break, the market is moving sideways, or there’s a major announcement about the company about to hit the news cycle.
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