What are momentum stocks? These are stocks that are from the fastest growing businesses and stocks on the market. These stocks rise rapidly and profits are dependent on exact timing. Day trading is often done using these types of stocks. They are not without risk, but the promises of substantial gains are a large factor in their popularity.
Using momentum stocks:
Swing trading: Swing trading will also make use of momentum stocks. The stocks will be held either for a number of days, or a few weeks. These stocks are traded on the principles of optimism, when they rise and pessimism, when they fall. This market is very volatile, and fortunes can be made and lost in just a matter of hours or days. It is important to be very savvy about the market trends and rising companies when you indulge in this form of stock trading.
Day trading: As the name implies this is when stocks are traded within the business trading day. This is the highest risk trading with momentum stocks. It will rely on perfect timings to catch the best peak to sell stocks. Momentum stocks are used for this kind of trading. Again certain companies are studied as hot popular movers. As the momentum stocks go up and down, they are sold and bought to correspond with these patterns. Profits are made and lost based on timings.
Trading with momentum stocks is a very exciting way to make money but you need to know what you are doing or you can lose a lot of money. You will not be perfect every time in your timings so be prepared to lose a little as well as gain profits.
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Source: www.isnare.com
