Module 4: Day Trading & Swing Trading Strategies

Question 1

Question: What is Scalping in day trading?

Answer 1

Answer: Scalping is a short-term trading strategy where traders make multiple trades throughout the day to capture small price movements for quick profits.

Question 2

Question: What is Momentum Trading?

Answer 2

Answer: Momentum trading involves buying stocks that are rapidly increasing in price and selling them before the momentum slows down.

Question 3

Question: What is Breakout Trading?

Answer 3

Answer: Breakout trading involves entering a trade when a stock moves outside a defined resistance or support level with increased volume.

Question 4

Question: What is Reversal Trading?

Answer 4

Answer: Reversal trading is a strategy where traders identify points where a stock’s price is likely to change direction.

Question 5

Question: What is Gap Trading?

Answer 5

Answer: Gap trading involves buying or selling stocks that experience a significant price jump or drop between market close and the next opening.

Question 6

Question: How do Moving Averages help in Swing Trading?

Answer 6

Answer: Moving averages help identify trends and provide entry/exit points for swing traders looking for medium-term trades.

Question 7

Question: How can traders set Stop-Loss Orders effectively?

Answer 7

Answer: Traders place stop-loss orders at strategic points to minimize losses if the trade moves against them.

Question 8

Question: What is Risk Management in trading?

Answer 8

Answer: Risk management involves setting strategies like stop-loss orders and proper position sizing to protect capital.

Question 9

Question: Why is a Trading Plan important?

Answer 9

Answer: A trading plan outlines entry/exit strategies, risk tolerance, and goals, helping traders stay disciplined and consistent.

Question 10

Question: What is a Golden Rule in trading?

Answer 10

Answer: The golden rule is: “Never trade without a plan,” as emotions can lead to costly mistakes.