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Equities Trading Strategies

Equities trading is the buying and selling of company shares. When trading on equities, investors do not take ownership of shares, but rather trade on their price movement. If a share moves in alignment with a trader’s prediction, the trader will gain more and more profit per point of market movement. Conversely, if a share moves against a trader’s open position, a loss will be incurred – the amount depending on the size of the share’s movement.

In this article we consider some strategies that could be useful for you to learn and implement before you start to trade equities:

  • 01

    Volatile Markets

    Different shares will have different base levels of market volatility. Regardless of which stock you are trading, share prices can fluctuate suddenly and dramatically, in sync with things such as company reports, international and financial news. Responding quickly to relevant news events can easily change a trade’s fate from a failure to a success – sometimes it only takes minutes for a trade to veer from profit to loss – or indeed, vice versa.

    Mobile trading apps enable you to respond instantly to news events that may affect your trades. With ETX Capital, you can trade using mobile trading apps optimised for both iOS and Android devices. We also offer trading hot-lists and trade-through charts, which will help you to execute trades in a more knowledgeable way. Don’t worry if you don’t understand any of these terms - our free educational trading seminars and webinars will be there to guide you along the way.

  • 02

    Planning Ahead: Exit Strategies

    Before opening a position, consider how much you are willing to lose before closing out your trade. It will serve you well to build a well-thought out strategy and stick with it, because while it is possible for a share’s price to move according to your speculations, there are no certainties. Often when the market moves against a trader’s position, many people will stay in a trade for a great deal longer than considered favourable, in hope that the market direction will soon take a turn for the better. So to try and minimise losses, cover yourself and plan an exit strategy before going ahead with a trade.

    Setting up stop losses before you start trading is an effective and widely-used method that saves traders from account wipe-outs from single failed trades. Stop losses close trades automatically when a trader’s account reaches a pre-defined limit, which can help to minimise losses and protect available funds. Please note, however, that regular stops may not necessarily close out a market at the position requested if market volatility is too strong for the trade to be closed at that exact level. Only the use of premium stops guarantees that trades will be closed exactly at the pre-requested level, although in regular market conditions a regular stop loss might work just as well.

  • 03

    Learn More About Trading Strategies

    For more on strategies on how to trade on equities, sign up to our regular trading seminars or webinars, free to ETX Capital clients. Register here for a free trial account with ETX Capital, or register for a full account today.

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