Let’s go into the numerous active trading strategies available. Unlike our previous investment strategies, these trading strategies require skill in choosing a stock to trade and timing for buying and selling. A strategy exists called daytrading, where a trader will buy and sell a stock on the same day. For example, a trader may see that a stock opens at a low price, and buy the stock, expecting a rebound. He will sell the stock an hour later when his estimate comes true, and the stock jumps 3%. Later in the afternoon the stock slides back down, but the trader already got his profit so he is safe. This type of strategy is for when a trader expects a sudden movement in stock, and he will quickly lock in his gains when things go his way, or else smartly cut losses if his stock doesn’t go up as expected. This strategy is pretty risky, as it requires very good timing, and knowing where to find opportunities to day trade. There’s another similar similar strategy called swing trading. It’s similar to daytrading because an investor believes that the stock will go up or down. Unlike daytrading, the investor believes that this price action will not happen immediately but he is confident that it will happen within the next few days or weeks.

This year has been really good for daytrading due to increased volatility. Unlike 2017, where the VIX(which tracks market volatility) was low, spy didn’t really move and there was not very good opportunities for trades. But this year saw big swings, with the market crashing 5% two times within a week, and spy going to all time highs, and SPY returning back down to end the year in red territory. Daytraders usually prosper during times of high volatility, when stocks are moving violently up and down. This year has been good for daytraders!