If you consider the financial markets a jungle, then your trading strategy is a detailed plan on how you will navigate and hunt successfully. In the financial markets, trading strategies outline how you will determine optimal entry and exit points that will allow you to earn maximum profits with as minimal risk as possible. The huge and diverse forex market has always accommodated varied, flexible trading strategies. However, when trading specialised financial markets, such as Indices, Bonds, Vanilla Options and ETFs among others, there are two broad strategies often implemented: day trading and swing trading.
Day trading Strategy
Day trading is simply the opening and closing of trades within a day, or multiple times a day. With profits/losses determined daily, day trading is considered to be as lucrative as it is risky, and a preserve of the more experienced investors. Nonetheless, with proper knowledge and skill, anyone can successfully day trade the financial markets. Day trading requires a great deal of discipline because of the number of trades one can execute in a short period. Day trading also requires proper knowledge in terms of essential trading principles and scheduled economic news on any particular trading session.
This trading method also requires decent capitalisation as well as the knowledge of the best trading hours for your preferred financial assets. Investors who wish to day trade must develop solid risk management plans and also sign up with a reputable and reliable broker whose trading platforms favour the high volume of trades that the strategy is based on. Having access to automated trading software also helps.
Swing trading Strategy
These types of trading platforms should also feature low spreads, professional charting and reliable orders’ execution. Swing trading, on the other hand, involves taking advantage of trading opportunities that may last from a few days to a few weeks. The belief is that big money is made from big price swings in the market. Swing trading is a strategy suited for assets that tend to make big directional movements occasionally.
Swing trading strategies require the patience to hold trades for days on end, without getting concerned with short-term fluctuations. Many investors employ swing trading strategies because of the time freedom (you do not need to be glued to your charts) as well as the excellent risk/reward balance that they provide. The most popular swing trading strategies are based on breakouts, wide ranges, trend reversals and trend retracements. Below you will find a selection of online trading strategies covering various financial instruments, and suitable for day traders and swing traders, so read on!
Risk Management Strategies
Risk management in the Finance industry refers to the process of identifying, evaluating, and mitigating risks of losses in an investment. Risk of loss arises when the market moves in the opposite direction of our expectations. After you have learned what financial risk management is, how the risk management process works, and how can we improve our success and increase our profits by managing our risk, we can trade with confidence.
Indices Trading Strategies
Offering lesser risk than individual stocks alongside a more diverse portfolio with smoother price movements, stock market indices around the world are powerful indicators for both global and country-specific economies. Read on to learn more about some of the most popular indices trading strategies.
Options Trading Strategies
The beauty of trading options comes from the ability to make choices for multiple parameters. Extensive control over the variables allows you to incorporate various trading strategies depending on different market conditions such as trend direction, duration, and volatility.
Price Action Trading Strategies
Price action is simply the study of price movement in the market. Various fundamental and technical analysis tools derive their values from price, so why not study, analyse and learn from the price itself? This is what price action traders attempt to do. Learn about their methods here.
What is Quantitative Trading + Quant. Trading Strategies
Quantitative trading is known to implement advanced modern technologies on huge databases so as to provide comprehensive analyses of the opportunities present in the market. It uses sophisticated mathematical and statistical models and computation to identify profitable opportunities in the financial markets. For quantitative traders, price and volume are the most important variables, and the bigger the dataset, the better.
News Trading Strategies Explained
News trading is a strategy that seeks to take advantage of opportunities that arise in the markets when relevant economic data and information hit the headlines. In any trading session, economic news and data are one of the major triggers of volatility or notable price changes. This means that news trading provides regular trading opportunities, but these opportunities are not without their risks. Learn more now!
Breakout Stocks Trading
Stocks breakouts are considered a vast source of opportunity or risk in the market. When a breakout occurs, it may be the beginning of a strong trend. Breakouts can offer huge opportunities for massive profits because they allow traders to ride out a new trend from its very beginning.
Forex Algorithmic Trading
There are a number of algorithmic trading strategies that use market opportunities to increase or improve the profitability of a trader. Here there are some of the common algorithmic trading strategies in use in the forex markets.
Backtesting Trading Strategies
Backtesting is determining whether a strategy is viable based on historical data. It aims to observe how the strategy would have performed in the markets in the past. Good strategies after backtesting give traders the confidence to apply them in the markets, while a flopping strategy can be tweaked or abandoned altogether.
Buy The Dip Strategy
‘Buying the dip’ is one of the most popular mantras in investment circles. It means buying an asset, like a stock, when the price has declined. The inherent belief is that the price dip represents a bargain on the underlying asset. You will stand to widen your profit margin when the price recovers to the previous high or even overextends it.
Range Trading Strategies
Range trading strategies help investors exploit lucrative opportunities when there is sideways price action in the market. The idea in a range-bound market is to identify support and resistance levels, from which prices bounce back and forth.