To invest in the stock market, the trader has the choice between several strategies and methods. The regulars and the most daring can opt for micro trading. It is an effective but risky technique, involving adopting specific tactics over a short period of time and allowing profits to be generated quickly… So, what is micro trading?
Understanding micro trading
Micro trading is an intra-day trading method. The principle is as follows: it is a question of exploiting the first quotations of the stock market to generate maximum profits. It is then necessary to ensure that you are available at specific times: during market opening hours (approximately 9 – 10 hours in French time). More precisely, the micro trading will last one hour. During this period, financial players are particularly active and prices are highly volatile. As a result of this exceptional volatility, the probability of gains is higher.
For whom? For whom?
Due to its specificities, micro trading is not suitable for everyone. Beginners should not venture into it. It is a method that is aimed mainly at experienced investors, who know the market well and are used to trading. In addition, a minimum amount of time (and within a specific time range) must be spent to ensure that the strategy is successful. In any case, you have to be present on the market every day.
Micro trading: advantages and disadvantages
Like any investment strategy, micro trading has advantages, but also some disadvantages to consider before adopting it.
First, the advantages: The trader only has to invest one hour of time daily for micro trading. The rest of the time, he can go on to other occupations. With micro trading, taking a position is simplified due to the high volatility of prices. For example, if you enter the market for buying or selling respectively after a fall or a sharp rise, it is possible to easily determine the stop on the basis of the graphs. This one is generally close to the point of entry. Finally, still in terms of benefits, micro trading is a good tactic to have a diversified portfolio. In any case, this technique can be combined with long-term strategies.
Then, some disadvantages: Despite its appearance of simplicity, micro trading involves great finesse and can only be used in highly liquid markets such as futures, equities or currencies. Given the constraints of this strategy, the pressure is quite high and stress is omnipresent. In any case, it is necessary to be responsive to exploit every market fluctuation.
In the end, micro trading is practical, but it must remain the prerogative of regulars, because the trader must perfectly master the analysis of market fluctuations, particularly through indicators (charts, news and others). Talking about micro trading in binary option is almost impossible because it is too risky, but it lends itself well to Forex (with ETX Capital for example) even if the risks remain high.