Learn aggressive trading strategies that can produce high returns in a short period of time. Some traders are risk-takers by their own nature, so this aggressive stock trading guide is for them. Additionally, you’ll learn how to build an aggressive stock portfolio along with 3 different ways to trade aggressively.
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Aggressive trading is a form of active trading style which requires new trading tactics if you don’t want to lose your account. We’ll teach you key trading concepts to survive when you take more risk.
This is what Warren Buffet, one of the most successful investors of all time has to say about risk-taking:
Risk comes from not knowing what you’re doing- trading quotes.
By taking a more calculated risk, you can build up your account and not lose it in the process.
This is good news, especially if you have a smaller trading account.
Most of the trading ideas you’ll learn through this guide were somehow used by our team of experts. So, it’s based on practical experience.
Let’s kick things off by explaining first answering the question, "what is an aggressive investor?"
What is an Aggressive Investor?
An aggressive investor is someone willing to take on higher risk in an attempt to maximize his profits. Very aggressive investors are comfortable withstanding larger drawdowns if they can capture more gains.
The key characteristics of an aggressive investor can be summarized into 3 elements:
- Open to more risk through the use of leverage or bigger position sizing.
- Aims to generate quick profits through day trading.
- Seek to generate alpha returns and beat the market performance as measured through the S&P 500 index.
On the opposite spectrum, we have conservative investors, which are risk-averse.
In other words, conservative investors prefer more balanced returns which is why they avoid high-risk investments. So, the difference between conservative and aggressive investors is not just about the risk taken, but also about the type of investments they choose.
For example, government bonds along with safe-haven assets are the preferred investment vehicles for a conservative investor. On the other hand and aggressive investor will choose stocks, commodities, ETFs, or currencies, which have a higher risk and are more volatile. Volatility and risk are strongly connected. Volatility leads to more opportunities to earn returns on your investment, but at the same time, volatility also increases the likelihood of a specific position losing money.
Let’s see when it’s the best time to use aggressive stock trading.
When Aggressive Trading Works Best
Coming back to the process of risk-taking, you can lose money even if you have the best aggressive investment strategy. Speculation is inherently risky. Not only the lack of training but also the market conditions can affect our ability to grow your capital. Also, check out this guide to find out how much capital you need for day trading.
So, we have to learn what market conditions are good to take on more risk.
The idea behind aggressive trading is taking on more risk and subsequently accepting a larger loss. Risk-tolerant traders will grow their portfolios by taking ten steps forward and five steps back. This is different from other trading strategies, which are more focused on taking just one step at a time.
But, we’re only going to accept more risk when the market is conducive to our trading style and our strategy. So, this is going to differ from trader to trader and the strategy you’re using.
For example, if you prefer a high-volatility environment, you only want to risk more in this type of environment. So, the plan is to press the accelerator pedal a little bit harder than we perhaps do in a low volatility trading environment.
There is no one-size-fits-all trading approach.
Certain things will only work under certain market conditions.
Next, we’re going to pull down the curtain and reveal some aggressive stock trading strategies that work.
Aggressive Trading Strategies
In this section, we’re going to cover 4 methods to trade aggressively.
There are many ways investors can optimize gains and aggressive trading is one of them. However, far more important is the ability to remain patient and only strike when the ideal trade setup shows up.
So, it’s not just about finding aggressive market behaviors, but also your ability to remain patient.
Otherwise, your own human nature will work against you and sabotage all your efforts in your quest to become more efficient. As we have discussed at length before, the effects of trading psychology can be very damaging to your portfolio.
If you’re an impatient trader and try to use aggressive trading strategies, it will typically lead to disastrous results.
So, before you attempt any of the aggressive stock trading methods outline below, make sure you first work on yourself. If you're not confident in your current trading strategy, start by trading on paper.
Let’s dive into the first aggressive funding strategy.
#1 Add to Winners
Adding to winners as the market moves in your favor is probably the easiest method to chase profits.
The theory behind this aggressive trading strategy is to let the winner run and then add some more to increase your profit potential.
Hedge fund billionaire George Soros, the man who crashed the British Pound in 1992 said:
“When you have tremendous conviction on a trade, you have to go for the jugular. It takes courage to be a pig. It takes courage to ride a profit with huge leverage….. When you're right on something, you can't own enough.”
In other words, George Soros is saying that what matters is “how much money you make when you're right and how much you lose when you're wrong.”
If your initial trade is showing you a profit that’s a sign the market has proven you right. So, you want to maximize the outcome of your trades when the market proves you right.
Of course, the downside is that when you go aggressive you leave yourself vulnerable.
When you’re averaging into a trade, you always bring your average cost (price) closer to the market price. So, a deep pullback can wipe out your profits.
#2 Trading More Markets
Adding more markets into the mix is another way aggressive investors make more money.
When you trade more markets, you trade more frequently and subsequently have more risk.
For example, you can include aggressive shares like penny stocks, which can potentially produce higher gains.
Aggressive trading works a little bit differently than conservative trading.
As we already learned, aggressive portfolios tend to favor stocks. Conservative portfolios, on the other hand, tend to favor bonds.
The good news is that on the US exchanges, we can get access to the best stocks in the world.
The next idea we’re going to look into is how to find early entry points for aggressive trading strategies.
#3 Aggressive Trading Entries
An aggressive entry allows traders to enter the market right from the beginning of the price movement. In other words, we’re looking to catch tops and bottoms.
Here is what billionaire hedge fund manager Paul Tudor Jones had to say about catching tops and bottoms.
“Everyone says you get killed trying to pick tops and bottoms and you make all your money by playing the trend in the middle. Well for twelve years I have been missing the meat in the middle but I have made a lot of money at tops and bottoms.”
However, for this to work timing the market needs to be on point.
Timing the market all comes down to two things:
- How good you’re to pick a good and accurate price level.
- Your ability to execute the trade right before the market starts moving.
An aggressive entry method is to buy or sell at the market once those two above trading conditions are satisfied.
For example, if your favorite stock hits your support level during the first 30 minutes after the opening bell, you don’t wait for more confirmation.
You just immediately buy at the market.
See the stock chart below:
The next idea we’re going to look into is how to set aggressive market targets.
#4 How to Set Aggressive Targets
You need to know when to be more aggressive in taking profits.
But, because bull markets are different than bear markets, we need to have different strategies.
In bull stock markets, it’s better to ride the trend. So, it’s best to let the profits build and don’t be that eager to cash out.
However, in bear markets, you need to be more aggressive with your profits because downtrends are shorter in duration. At the same time, pullbacks are short-lived. So, in this scenario, it’s best to cash in as fast as possible.
As the saying goes:
“Stocks take the staircase up and the elevator down”
In other words, stocks tend to drop faster than they rise.
In the next section, you’re going to discover how to find trades using the 1-minute time frame.
1-Minute Aggressive Stock Trading Strategy
Shorter time frames give you the opportunity to trade more frequently.
And, if you trade more frequently you’re an aggressive trader.
Let’s talk about aggressive stock trading using the 1-minute chart.
1-Minute Scalping Strategy
If you’re an ultra-aggressive scalper, we have a strategy in store for you.
The trading rules are pretty simple to follow.
Bear in mind that you need to be quick and take profits without hesitation.
The theory behind this strategy is to buy pullbacks in an uptrend and sell rallies in a downtrend.
If you think about it, it makes sense.
Now, we’re going to use the stochastic indicator as a guide to time the buying and selling spots.
Secondly, we’re going to use a trendline to gauge the trend.
Let’s look over a real example and how this works in the stock market.
Note* These trading rules can be applied to any other market and build your own aggressive forex trading strategies.
See the 1-minute Twitter chart below:
To draw a trendline we need at least two points of connection.
In the stock example above, we have two lower highs as our points of connection.
This indicates we’re moving in a downtrend, so we want to sell rallies into the trendline.
For this, we’re going to use the stochastic indicator to reach overbought condition as we retest the trendline.
See the stock chart below:
For the take profit strategy and exit strategy a good place to start is to use the already known strategies like the preview lows and highs, double tops and bottoms, reversal patterns, etc.
See the stock chart below:
Your challenge with this scalping strategy will be to find a decent short-term trending environment.
The second danger you face is that you’re constantly focusing on very short-term timeframe and you miss what’s going on on the higher timeframe.
Usually, the higher time frames are the fuel to the fire.
Smart money moves over a period of days and weeks. That’s how the big money flows into the market. Due to liquidity constraints, you just can’t execute big volume trades on the 1 minute time frame
Final Words – Aggressive Stock Trading
In summary, aggressive stock trading is not for the faint-hearted. You need to be able to deal with a high level of stress and be very quick in your decision-making process. The most important lesson takeaway is that you need a high tolerance for risk to succeed with aggressive trading.
We encourage you to test these aggressive trading strategies with a paper money account before putting real money at risk.
To sum up everything, here are the top five aggressive trading strategies:
- Add to winners.
- Trade more markets.
- Be more aggressive with your entires.
- Have aggressive targets.
Let us know what is your investing style. Are you conservative or aggressive?
Thank you for reading!
Take a look at the Holy Grail of Trading to learn more about balancing risk and reward.
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