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Winning Indices Trading Strategies for Day Traders

Australia is quickly becoming one of the largest international hubs for stocks, shares, and foreign exchange trade as it has one of the strongest financial sectors. It is an active and ambitious ground for bilateral, multilateral and regional trade, and the markets are open, competitive, resilient and diverse. With stocks, shares and forex being the most well-known forms of day trade, trade indices come in the middle, managing better volatility, risk factor, investment amount, diverse portfolio, smoother price movement, and the returns. They are powerful indicators of the country’s and the global economy.

What Are Day Trade Indices?

Similar to forex trade, day trading in indices is a method of purchasing and selling indices among traders on the same day by closing all the open positions before the day ends. One of the major benefits of day trading is avoiding the risk of bearing additional costs by trading overnight. Its goal is to reap profits quickly, with the slightest price movements, within the day. However, traders must pay close attention to the changes in the market and be ready to make quick decisions when the prices move towards or against their intended direction. These shifts usually occur due to geopolitical or economic news. Therefore traders must be up-to-date on current events and must have the ability to anticipate trends in the market to make informed decisions. Mentioned below are some indicators that they can look out for.

Financial Announcements by Multinational Corporations

Individual stocks of large companies have strong influences on the prices of the indices, making them volatile. Significant announcements and annual reports from these global businesses can have a significant impact on the index prices if their figures fall behind or beat their expectations. If a company outperforms in the market, then the stock prices increase and also the company’s index. The same goes for a disappointing announcement, which provides a devastating blow to the stock and the company’s name. Therefore day traders following trade indices must be up-to-date with corporate announcements and be ready to invest or pull out at any time of the day.

Early Trade Breaking Out Strategy

Breakout trading is a strategy popular among index traders, where they take a position early in the day’s trend. it causes them to be a starting point in major price shifts, and volatility and when they manage it well, it creates minimal downside risk. They consider the support level or the point where the share price can bounce back after a severe fall and the resistance level, where the share prices can shift downside after a significant rise. The breakout indicates the price moving beyond the resistance and support level. The trading strategy involves a trader entering a short position when the share price falls below the support or taking a long position when the price breaks beyond the resistance level. When the price moves beyond these two barriers, the indices are usually volatile, and the prices trend towards the breakout.

Position Trading Strategy

This strategy involves a trader purchasing and keeping an index for several days, weeks or longer to avoid short-term fluctuations in the market. They usually make relatively fewer trades than conventional day traders. However, they also have a low risk and a potential for better profit.

Trend Trading Strategy

Traders following this strategy focus on profiting from short and mid-term market trends that have a strong influence on the index. Depending on the general market sentiment, they take a bearish or a bullish position and keep it open until the trade continues. They use guaranteed stops and stop-losses to prevent losses and reap profits despite unfavourable trends.

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