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Becoming an expert short-term trader takes a great deal of work, experience, know-how, and money. It is difficult and can be dangerous. However, you can make good profits by adhering to a strict risk/reward strategy, and these tips should help. the nature of the risk in short-term trading is not understood by very many people. As a trader, you really are not risking your entire investment on a particular transaction, as the odds are high that you will be out of the stock as soon as it looks even remotely weak. The real risk lies in the fact that while a shortterm trader cuts his losses, he also cuts his profits. To be successful at this sort of thing, you will have to pick stocks that are going up and going up now. Otherwise, you are going to spend half your fortune and most of your time chasing your tail. Here are some helpful hints: 1 Consider buying after a stock has pulled back. This will give you a better risk/reward ratio and a tighter stop loss. You need every edge in this endeavor. 2 Sell immediately if the stock turns sour. Sell if it drops below its support line. The idea is not to let it head south like a migrating bird. Violation of the support line or a strong area of support is a strong warning to exit the position. 3 Have in mind a fairly precise short-term target. The vertical count used in point and figure would be very effective. If the stock moves up, move the stop loss up below it until you are finally stopped out. 4 An alternative to the above procedures would be to construct a trendline as soon as possible. If this is violated, sell the stock. There is always one main trendline. However, the short-term trader may want to redraw shorter trendlines. 5 Trendlines can prove useful to the short-term trader in another way. A stock in an uptrend may be purchased as it hits the bottom of the trendline. If the stock does not rally off that trendline and continues its decline, then you have a close stop loss.
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