Recently, many beginners have been asking how to do short-term trading, so I’ve compiled some practical insights to share with everyone.

Short-term trading, simply put, is buying and selling within a short period to profit from price differences, which can be completed within minutes or holding positions for several days. It’s completely different from value investing where you buy and hold for ten years; short-term traders only care about which direction the price will move in the next hour, day, or week.

I’ve noticed that many people are initially attracted by the high frequency and high returns, but in reality, short-term trading carries significant risks. The key is to find the right entry and exit points, along with strict risk management.

So where are the opportunities for short-term trading? First, in markets with large, sustained fluctuations that are relatively easy to identify, usually during clear trend phases. Second, in markets with moderate volatility but high frequency of movement; as long as you grasp the rhythm, you can continuously accumulate profits. But be especially cautious of markets with extremely volatile swings; if your technical skills aren’t strong enough, it’s easy to get liquidated.

I’ve summarized a few steps to identify potential trading opportunities:

First, observe the moving averages. Moving averages are good tools for predicting price trends and identifying support and resistance levels. If the price is above the moving average, it indicates a bullish trend; if below, the opposite.

Second, understand the overall market cycle. Markets typically go through four stages: range-bound (price fluctuates between highs and lows), breakout (market breaks inertia and forms a clear trend), decline (price returns to previous levels), and uncertainty (confusion after both bulls and bears have completed their moves). During the uncertainty phase, it’s best to stay away because predictions are difficult.

Third, recognize the market trend. Trends can be long-term, short-term, upward, downward, or sideways. If the trend is against your position, your chances of success decrease significantly. Following the trend is very important.

Fourth, mindset is the foundation of everything. I’ve seen too many people make money in demo trading but lose in real trading. That’s a mindset issue. You need to control your emotions, manage your capital, understand losses correctly, and most importantly, always prioritize risk.

There are also tips for selecting stocks suitable for short-term trading. Don’t focus solely on fundamentals, because short-term trading allows both long and short positions. Look for stocks with themes, high trading volume, and large price swings. These often appear during volatile market periods or when companies release major news.

In practice, I’ve summarized some operational techniques. When a stock just starts to rise, with a small increase and the moving averages diverging upward, wait for the price to pull back to the 5-day moving average before buying. If the overall market declines but a stock rises against the trend by over 5% with increased volume, that’s also worth attention. Some stocks surge quickly then sharply fall back, with decreasing volume; if the decline exceeds half of the previous rise, it’s a good opportunity to jump in for a rebound.

Another important criterion: if the monthly and weekly candlesticks are both at low levels, with volume accumulated, the 3-day moving average is rising with volume, and the 60-minute chart shows a volume-driven golden cross upward, it indicates the stock may be in a hot sector just starting to move — a good short-term trading opportunity.

Finally, I must emphasize that if you make a wrong judgment, you should cut losses immediately. When the stock reaches a psychological price level, take profits without hesitation. Never be greedy. The core of short-term trading is risk control, seizing opportunities, and quick exits. The market always moves forward, and technical analysis is especially important in short-term trading.

Ultimately, short-term trading is about being good at identifying potential opportunities, effectively managing risks, and utilizing technical analysis to continuously profit in this market.