Active trading as a way to get record profits on the stock exchange
There are two terms in exchange activity – active and passive trading, the classification of trading types is based on the duration of transactions and the very approach to working on the exchange.
Active trading is aggressive trading in pursuit of big profits, passive trading is making long-term investments with reliable results.
Each of these investment methods has its own strengths and weaknesses, which we will discuss below.
Distinctive features of active trading
Profitability of transactions.
It is quite easy to calculate who will earn more, imagine that in a day the trend went 100 points from the opening price to the closing price. At the same time, the rate rose and fell more than ten times within the price corridor. As a result, if you measure the entire length of the curve, you will get a result that is at least 3-4 times greater than 100 points.
It is clear that not all opportunities are used, but in any case, you will earn twice as much only on the trend curve.
Leverage.
When making transactions lasting from one minute to an hour, it is quite possible to use leverage 1:100, and sometimes more. At the same time, with passive trading, you are unlikely to be able to survive a correction with a leverage of more than 1:10, it is theoretically possible, but in practice the stop loss will work and your trade will close with a loss.
That is, given the dynamics of the trend and leverage, we can say that active trading is at least 20 times more profitable than passive trading.
Difficulty of trading.
Active trading requires a lot of time and effort, it is much easier to open one trade per day or even per week and only occasionally check the situation on the market.
Active trading requires constant presence at the trading terminal; before each entry into the market, at least a cursory analysis of it is carried out.
Risk.
At first glance, it seems that passive trading is less risky, but if you do not take into account such a concept as a gap , no stop loss will help when it appears, the deal will be closed at the nearest quote. It is this parameter that increases the risk of long-term transactions, since in short-term trading you can not risk the entire deposit, but replace it with leverage.
For example, if you have a deposit of $1,000 and a leverage of 1:10, you open a long-term trade of 0.1 lots. At the same time, $100 is enough to open a deal of the same volume with a leverage of 1:100. That is, with a gap, you will lose the amount several times less.
If you do not want to be constantly tied to a computer, and at the same time are not sure about the profitability of passive trading, trust management with guaranteed profitability can be an alternative choice .
