About Core Trading

Unlike scalp and swing trading, core trading takes advantage of situations in the market that require longer lengths of time to develop. For these types of trades, market assessments and decisions are generally made after market hours due to the busy activities of the trading day. Both detailed fundamental and technical analysis are very important before executing core trades. The challenge of core trading tests a trader’s skills at stock picking and predicting the future of stocks. Traditionally, speculative technical markets have provided the conditional environment necessary for core trading.

In many historical cases, the length of time for developing stock for a new business could be as long as a few months to a few years, while core trades are generally a few days to several weeks. These trading methods may require significant patience, but the possible profits from these markets are too great to ignore. Other key benefits to use core trading is for traders to hold specific positions as we wait for dominant trends in the market to further develop.

The following are necessary elements to remember when core trading:

· The Core Trade Mindset – Since a longer period of trade is a consideration, you must keep in mind the larger price fluctuations by staying in tune with the overall perspective. This is very different from swing or scalp trading in that you need to be as detached as possible for the busy intraday trading issues. The idea is to think more and react less over daily fluctuations.

· Separate Accounts – As an active day trader, you may be involved in scalp or swing trading in addition to your core trading activities. Having separate accounts for the your intraday transactions from your core trading actions will be easier to maintain, including the prevention unnecessary errors as you try to calculate your daily profits, losses and costs.

· Dominant Trends – On a daily basis check the major market indexes such as the S& P 500, the NASDAQ composite, and the Dow Jones industrials. Specific stocks can either be up, down or moving to the side. If the market is on an uptrend, buy pullouts and breakouts. If there’s a downtrend, simply do theopposite. A sideways movement means the market is treading on uncertainty. In this case you need to maintain tight stops and go for the smaller profits.

· Look for Strong Targets – Choose potential targets that are breaking out with a history of good performance during bear phases. If it’s possible that the market is moving toward a bullish market, these type targets may be a better investment.

· Cheap Stocks – It may be tempting to purchase the bottom picks, but it isn’t necessarily in your best interest. Try to maintain the rules of trend and manage your risks in buying the stronger stocks and selling the weaker ones.

· Technical Analysis – Follow daily and weekly charts on technical indicators in the stock market. Know the resistance levels, the moving averages, and volume trends. After you set your stop loss based on this information, stick to it. Technical analysis is often tell you more than fundamental analysis.

· Fundamental Analysis – Fundamental news and analysis is often beneficial as a cross-reference with the information you derive from you technical analysis. Also, a very important news can promote a dominant effect or trend in the stock market.

· Wide Stops – Keep your reward-to-risk ratios realistic with the stock movement and as key market trends shift one way or the other. Continue to set your stops and exit points according to resistance levels from your technical and fundamental analysis.

· Small Bets – Small bets always keeps your risks lower than larger bets with more to lose. Several small winning trades could add up to a large, significant profit.

The benefits of small bets include:

1) You can build a large trading position by adding to a little at a time as the market swings in your favor.

2) If the stock moves against you, it’s easier to exit at a faster pace.

· Technology Issues – With technology always moving forward in leaps and bounds, especially in our day and time, consider any technology-related issues. This is the market where you can usually find many of the large price moves.

· Stock Knowledge – Core trading requires significant understanding of the stock’s nature such as the products and services that the stock’s business is involved. Necessary fundamental knowledge is very valuable, and therefore, requires a great deal more research and analysis than swing or scalp trading.

· Decisive Exit & Entry Points – Even though core trading is significantly different from swing trading, the knowledge of intraday price swings will still be helpful as you determine a down momentum or an approaching rally in the market. These market forces produce the relative points at which you choose to enter and exit a core trade, thereby a huge factor in your success.

· Go with the Flow – Don’t ignore or balk against trends that could significantly increase your losses. This is self-destructive behavior that could end up being very financially painful. Take advantage of the financial opportunities that trends provide instead of moving against them. When the trend dies, you can move on.