What is Guerrilla Trading?

5.0

01 Nov, 2021

7 min read

8962 Views

icon
Guerrilla trading is a short-term trading strategy that tries to make tiny, quick returns while assuming minimal risk per trade. This is done by making minor transactions during a single trading session. While the method is suitable for seasoned investors with resources, it is helpful to know more about it.

Introduction

Guerrilla trading refers to the method of trading made use of by traders that move within the financial jungle in short time frames with a goal to acquire quick profits while incurring minimum risks.

A trading characteristic that is key for guerrilla traders involves a limited time frame (smaller than a scalper) and the ability to make a day trader look as though they are involved in long-term investing.

The only systems to have trade timelines that are smaller than guerrilla traders are high-frequency systems.

The primary objective of guerrilla trading is to generate small profits across several transactions. This means that in order to be successful, such traders should experience minute commissions, major leverage and tight trading spreads.

Although guerrilla trading techniques can be employed within any financial market, they are best suited to foreign exchange trades. This holds particularly true in case of major currency pairs that are mostly liquid with low spreads.

Features of Guerrilla Trading

Guerrilla traders operate with the objective of acquiring low absolute profits across each trade. They trade several times within a single session such that the overall gains they acquire are sufficient to overlook the risks they incur while engaging in short-term trading.

Guerrilla trading ordinarily features the following characteristics.

An extremely short-term trading timeframe – Most guerrilla traders engage in trades that last a few minutes and rarely extend beyond this time frame. This is due to the fact that more time carved out for a trade implies more risks with the trade working against the trader.

Small profits with even smaller losses – Guerrilla traders are happy to earn only 10 to 20 pips via forex trade as opposed to scalpers whose objective may be to acquire double this figure if not 25 to 50 pips. This implies that guerrilla traders can’t risk more than a limited set of pips across a single trade such that the maximum losses they incur are limited to 5 to 10 pips.

Major number of traders – Guerrilla traders that are successful may carry out more than 25 to 25 trades within one trading session in instances that allow for frenzied trading. This is likely to arise in instances of important economic data being released.

 

Technical analysis – Owing to the short-term time frames, guerrilla traders ordinarily rely on technical analysis in order to time their trades. They are fluent with tick charts or 1-minute charts that identify entry and exist points for each of their trades.

Low commissions and spreads – Owing to the high number of trades and low-returns derived, guerrilla trading is majorly dependent on low commissions and tight trading spreads. Owing to this fact, such traders limit themselves to pronounced currency pairs that have high liquidity levels as opposed to rarely used currencies that might be a greater source of profit but lack liquidity.

Experienced traders – Ordinarily, only experienced traders make use of a guerrilla trading strategy and have successfully traded for several years. Those that are new to the market and aren’t encouraged to partake in this form of trading as they can finish their risk capital in no time.

Calculated risk-taking – Owing to the fact that guerrilla traders must be calculated in the risks they take on, they must have a stop-loss that amounts to a nominal number of pips per trade. They therefore might seek to remain on the side lines in instances of volatile markets and the risk of loss being too pronounced.

Traits Possessed by Guerrilla Traders

Guerrilla traders that are successful often possess the following traits.

Quick decision making – Forex markets are known to be fickle and successful traders must be able to make trading decisions with speed such that they can maximize their gains and minimize their losses.

Emotionally detached – Traders must be emotionally detached from each of their trades and hold on to no love for their trades that could put them in a position to lose. Neither should they hold onto any regrets pertaining to their trading decisions.

Sufficient risk capital – Successful guerrilla traders are in possession of a significant amount of risk capital and know just how much they ought to risk on individual trades as well as trades in their entirety.

Trading experience – Successful guerrilla traders are likely to have ample experience within high-pressure trading scenarios over the span of several years.

Conclusion

In order to be successful with guerrilla trading, it is important for traders to make sure their trading losses are minimal and expect that their gains in instances of profitable positions can offset such losses majorly. Automatic stop losses are a pertinent and viable guerrilla trading strategy.

Frequently Asked Questions

Q1. What is the main objective of guerrilla trading?
A1. The main objective of guerrilla trading is to generate small profits across several transactions. This means that in order to be successful, such traders should experience minute commissions, major leverage and tight trading spreads.

Q2. What is the trade timeline of a guerrilla trader?
A2. The trade timeline of a guerrilla trader is extremely short such that a day trader’s timeframe for traders looks like a long-term investment when compared to a guerrilla trader’s timeframe.

How would you rate this blog?

Comments (0)

Add Comment

Related Blogs

  • icon

    Top 5 IPOs of 2021

    01 Feb, 2022

    6 min read

    READ MORE
  • icon

    What Happens to Bitcoin...

    14 Feb, 2022

    6 min read

    READ MORE
  • icon

    How To Use a Moving...

    07 May, 2022

    6 min read

    READ MORE
  • icon

    Success Story of Paytm -...

    02 Aug, 2021

    10 min read

    READ MORE
  • icon

    Income Tax in India -...

    02 Oct, 2021

    7 min read

    READ MORE
  • icon

    What is CMP in the Stock Market?

    20 Jul, 2021

    8 min read

    READ MORE
  • icon

    The Success Story of Jack...

    22 Oct, 2021

    5 min read

    READ MORE
  • icon

    5 Stocks to Watch Out for...

    05 Jan, 2022

    8 min read

    READ MORE
  • icon

    What is Momentum in Stock Trading?

    26 Jul, 2021

    9 min read

    READ MORE
  • icon

    IRCTC Stock and Share Split

    03 Dec, 2021

    7 min read

    READ MORE
  • icon

    Exploring top Retirement...

    08 Oct, 2021

    7 min read

    READ MORE
  • icon

    Is Google a Good Investment?

    11 Nov, 2021

    8 min read

    READ MORE
  • icon

    Investors Walk Away from...

    27 Oct, 2021

    7 min read

    READ MORE
  • icon

    Why companies are choosing...

    01 Aug, 2021

    9 min read

    READ MORE
  • icon

    Success Story of Elon...

    28 Jul, 2021

    9 min read

    READ MORE
  • icon

    Preference Shares:...

    17 Mar, 2022

    6 min read

    READ MORE
  • icon

    Long-Term Investments

    28 Jan, 2022

    7 min read

    READ MORE
  • icon

    Margin Trade Funding (MTF)

    21 Aug, 2021

    8 min read

    READ MORE
  • icon

    Success Story of Jeff...

    27 Jul, 2021

    9 min read

    READ MORE
  • icon

    LIC IPO: Benefits for Policyholders

    18 Feb, 2022

    7 min read

    READ MORE
  • icon

    Blue Chips Fuel Record

    25 Oct, 2021

    6 min read

    READ MORE
  • icon

    IPO Advantages and Disadvantages

    03 Oct, 2021

    7 min read

    READ MORE
  • icon

    Understanding Different...

    09 Mar, 2022

    8 min read

    READ MORE
  • icon

    Paytm IPO

    08 Nov, 2021

    7 min read

    READ MORE
  • icon

    Upcoming IPO in Nov-2021

    08 Nov, 2021

    8 min read

    READ MORE
  • icon

    Should you invest in the Paytm IPO?

    31 Jul, 2021

    9 min read

    READ MORE
  • icon

    Top 10 Most Inspirational...

    27 Apr, 2022

    7 min read

    READ MORE
  • icon

    All About Commodity Market In India

    25 Jul, 2021

    12 min read

    READ MORE
  • icon

    10 Ways to Profit in a Bear Market

    30 Nov, 2021

    8 min read

    READ MORE
  • icon

    LIC IPO Details: Should...

    18 Feb, 2022

    6 min read

    READ MORE
  • icon

    Nykaa Success Story -...

    22 Dec, 2021

    8 min read

    READ MORE
  • icon

    Stocks to Watch: NMDC,...

    24 Aug, 2021

    5 min read

    READ MORE
  • icon

    Go Air IPO: Go Air looks...

    11 Jul, 2021

    11 min read

    READ MORE
  • icon

    Environmental Impact of...

    09 Nov, 2021

    7 min read

    READ MORE
  • icon

    Futures Options Strategy Guide

    19 Jan, 2022

    8 min read

    READ MORE
  • icon

    Options Trading Explained:...

    01 Oct, 2021

    8 min read

    READ MORE
  • icon

    Indian Railways Share...

    24 Sep, 2021

    7 min read

    READ MORE
  • icon

    Success Story of Vijay Kedia

    21 Oct, 2021

    8 min read

    READ MORE
  • icon

    Understanding Taxation on...

    26 Oct, 2021

    7 min read

    READ MORE
  • icon

    Byju’s IPO Plans

    06 Oct, 2021

    5 min read

    READ MORE
  • icon

    OYO Success Story:...

    22 Jul, 2021

    8 min read

    READ MORE
  • icon

    Laurus Labs Share: More...

    23 Jul, 2021

    8 min read

    READ MORE
  • icon

    Should you Invest in the...

    30 Aug, 2021

    7 min read

    READ MORE
  • icon

    Lenskart Startup Story:...

    29 Mar, 2022

    6 min read

    READ MORE
  • icon

    Ratan Tata's Youngest...

    15 May, 2022

    4 min read

    READ MORE
  • icon

    Trading Strategy for...

    24 Jul, 2021

    11 min read

    READ MORE
  • icon

    Stock Trading Bot

    03 Nov, 2021

    7 min read

    READ MORE
  • icon

    What is Pre-Market...

    10 Feb, 2022

    6 min read

    READ MORE
  • icon

    How are Dividends on Stocks Taxed?

    29 Jul, 2021

    8 min read

    READ MORE
  • icon

    LIC Seeks to Appoint CFO

    13 Oct, 2021

    6 min read

    READ MORE
  • icon

    Tax free Interest Income in India

    22 Aug, 2021

    6 min read

    READ MORE
  • icon

    Ashneer Grover Biography -...

    28 Feb, 2022

    5 min read

    READ MORE
  • icon

    Introduction of Artificial...

    10 Jul, 2021

    8 min read

    READ MORE
  • icon

    What is Cryptocurrency?

    09 Oct, 2021

    7 min read

    READ MORE
  • icon

    Taxation of Permanent...

    02 Dec, 2021

    7 min read

    READ MORE
  • icon

    How Does Bitcoin Mining Work

    21 Jan, 2022

    7 min read

    READ MORE
  • icon

    An Introduction to Trading...

    10 Nov, 2021

    7 min read

    READ MORE
  • icon

    Welfare Loss of Taxation

    28 Oct, 2021

    7 min read

    READ MORE
  • icon

    Commodities Trading: An Overview

    25 Aug, 2021

    9 min read

    READ MORE
  • icon

    Forex Trading: A Beginner's Guide

    27 Aug, 2021

    6 min read

    READ MORE
  • icon

    ​​Sugar Stocks Down as Sensex Falls

    29 Oct, 2021

    7 min read

    READ MORE
  • icon

    The Fibonacci Retracement:...

    31 May, 2022

    5 min read

    READ MORE
  • icon

    Top 10 Cryptocurrency to...

    12 Jul, 2021

    10 min read

    READ MORE
  • icon

    Taxation Rules for Bond Investors

    03 Jan, 2022

    4 min read

    READ MORE
  • icon

    Success story – Anil Ambani

    23 Sep, 2021

    6 min read

    READ MORE
  • icon

    Raamdeo Agrawal: How...

    13 Jan, 2022

    10 min read

    READ MORE
  • icon

    Exploring Ed-Tech Giant...

    02 Mar, 2022

    8 min read

    READ MORE
  • icon

    What Is Double Taxation?

    11 Jan, 2022

    7 min read

    READ MORE
  • icon

    Deadweight Loss Of Taxation

    31 Jan, 2022

    7 min read

    READ MORE
  • icon

    Foreign Investment Funds...

    02 Feb, 2022

    6 min read

    READ MORE
  • icon

    Should You Invest in...

    10 Oct, 2021

    8 min read

    READ MORE
  • icon

    Cryptocurrency Insurance,...

    08 Nov, 2021

    6 min read

    READ MORE
  • icon

    Capital Gains Tax

    23 Mar, 2022

    5 min read

    READ MORE
  • icon

    Double Taxation Hangs On...

    01 Dec, 2021

    8 min read

    READ MORE
  • icon

    Invesco drags Zee to NCLT

    06 Dec, 2021

    8 min read

    READ MORE
  • icon

    Pair Trading Logic

    26 Aug, 2021

    6 min read

    READ MORE
  • icon

    Crypto Ban in India?

    25 Jan, 2022

    6 min read

    READ MORE
  • icon

    Clean Science, GR...

    23 Aug, 2021

    6 min read

    READ MORE
  • icon

    Taxation in 2022:...

    11 Apr, 2022

    7 min read

    READ MORE
  • icon

    Top 5 eco-friendly cryptocurrencies

    21 Dec, 2021

    9 min read

    READ MORE
  • icon

    SEBI revises risk...

    07 Dec, 2021

    8 min read

    READ MORE
  • icon

    India’s top 10 favourite...

    22 Dec, 2021

    8 min read

    READ MORE
  • icon

    Taxation on Mutual Funds

    04 Oct, 2021

    6 min read

    READ MORE
  • icon

    Gold Bond Investment in India

    07 Oct, 2021

    6 min read

    READ MORE
  • icon

    What are ELSS Funds?

    20 Aug, 2021

    8 min read

    READ MORE
  • icon

    LIC IPO: All we Know So Far

    05 Oct, 2021

    7 min read

    READ MORE

Translate the power of knowledge into action. Open Free* Demat Account

* T&C Apply

Latest Blog

Ready To Trade? Start with

angleone_itrade_img angleone_itrade_img

Subscribe to #SmartSauda Newsletter

Open an account