Trading Blue Chips vs Momentum Stocks

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There’s a reason Blue-Chip stocks are in fact Blue-Chip, this does however create a unique trading style, in this video we discuss the differences between traditional Blue-Chip stocks and what we would classify as Momentum stocks! ******. Watch our Live Trading show, Monday to Friday from 9 am to Noon! https://www.youtube.com/tradertvlive

Understanding the way a stock trades day in and day out becomes important when deciding what type of trader you will be. While narrowing your focus and trading style you may come to understand different stocks have very different characteristics in how they trade. Blue-Chip stocks typically have less volatility and smaller ranges, without a news catalyst simply because they are sound, profitable well established companies that have been around for decades and most likely will be around for decades. That doesn’t mean we cannot trade them, let’s discuss the most common approaches to trading these slower moving stocks in comparison to momentum stocks.

⏳ Outline:
0:00 Intro
0:45 What defines a “Blue-Chip” stock?
3:00 Just because a stock is not a “Blue-Chip” doesn’t make it bad to trade
5:30 When can we trade “Blue-Chip” stocks?
6:25 Let’s look at JNJ
8:19 Basic investing principles
9:55 Why does momentum typically follow “Topical” type ideas?
11:25 Summary

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Momentum Trading News, Trading Blue Chips vs Momentum Stocks.

Momentum in finance is based upon the complying with essential elements:

Volume:

Volume is the quantity of a certain property that is traded within a provided amount of time. Volume is not the number of transactions, however the variety of possessions traded– so, if five purchasers acquisition one property each, it looks the same as if one customer acquisitions five of the property.

Volume is crucial to Momentum investors, as they need to be able to get in and also leave settings rapidly, which relies on there being a constant stream of customers and also vendors out there. If a market has a high number of buyers as well as vendors, it is called a fluid market as it is much easier to trade a possession for cash. Whereas if a market has a low variety of purchasers and also sellers, it is considered as illiquid.

Volatility:

Volatility is Momentum Trader’s investors’ support. Volatility is the degree of adjustment in an asset’s price– if a market is very volatile, it implies that there allow rate swings, while a market with low volatility is comparatively secure.

Momentum investors will certainly look for unpredictable markets, in order to capitalize on short-term rises and falls in a possession’s value. As Momentum trading attempts to capitalise on volatility, it is very important to have an ideal danger monitoring approach in position to secure your professions from adverse market motions. This must include quits and restrictions.

Timespan:

Momentum trading methods are normally focused on temporary market activities, yet the period of a profession can rely on how much time the pattern maintains its toughness. This might make appropriates for investors that use longer-term styles such as setting trading, along with those who choose short-term styles, such as day trading and scalping.

How to start Momentum trading
Determine the asset you are interested in
Create A Momentum trading approach based upon technical indications and also analysis
Practise trading in a safe environment using an IG demonstration account
Begin trading on online markets by opening an account with IG
Conversely, you can discover more regarding trading techniques as well as indications with IG Academy’s series of online training courses.

Explore Relevant Articles Top Searched Momentum Trading News and Financial market information, analysis, trading signals as well as Foreign exchange financial expert testimonials.

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