Active Trading Strategy
Trading strategies represent how an individual investor---possibly an investment firm---goes about buying and selling stock on exchanges. An active trading strategy is an alternative to the "buy and hold" method, which relies on long-term capital gains for financial returns.
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Defined
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Active trading strategies involve the use of plans or ideas to buy and sell stock investments in a matter of hours, days or weeks. Investors focus more on short-term gains offered through investments. Companies targeted by these investments may be in high-growth industries and expanding operations quickly rather than stabilizing their operations.
Features
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Technical analysis is a common feature of an active trading strategy. This analysis involves short-term price trend analysis, where investors look for stock prices moving in a particular fashion, which can indicate a repeat of historical prices.
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Use
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Day traders are common users of an active trading strategy. These individuals often work in stock exchanges and have access to information that is useful for technical analysis. This allows these individuals the ability to act quickly on information if necessary.
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