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July 29, 2021

Trusted classic strategies

 Finding your perfect trading strategy or even defining what direction you would like to take might be difficult for a trader. That’s why you can always use the classics for starters. Check these time-tested strategies and see which one works for you.

Trading is all about planning. It’s important to come up with a strategy that satisfies your needs and preferences, but most importantly it needs to suit your trading style as well. Though figuring out the strong suits might take a lot of time for a person, finding the style of trading to get the most out of it remains crucial.


Meanwhile, it wouldn’t hurt to try some trusted strategies that many traders across the world successfully used.


Momentum trading

This trading strategy goes against the first impulse of every beginner trader, i.e. buying an asset when everyone else is buying it and selling when everyone is selling. On the contrary, momentum trading strategy is based on a basic rule of the market: once the price reaches a certain limit, it will inevitably bounce back. For a trader that uses the momentum trading strategy, determining that moment is the most crucial part.


Will it suit you?


This trading strategy might be right for you if:


You are a disciplined trader


You would like to use more indicators and oscillators in your trading


You are ready to place and close orders any time once there is an opportunity 


Scalping

This type of strategy is well-known among traders, either beginners or experienced ones. This strategy lets you get small gains on many different orders you place throughout the day. Buy fast, sell fast - that’s what scalping is all about.


The philosophy behind the scalping strategy is easy to understand. All assets have their initial price direction which they follow for a certain, albeit small, amount of time. Scalpers use that short timespan to place a deal and close it as soon as they get profit, even if it is relatively small. They get the best out of the fact that even when the market is relatively quiet, there are a lot of small movements that you can use for your benefit. Most scalpers who focus on this strategy only place hundreds of deals per day.


Will it suit you?


Scalping might be your new thing if:


You don’t want to wait a significant amount of time to get your profit


You are good at planning your budget


You prefer higher volume deals


You want your trading strategy to involve fewer risks


Breakout trading

If you did your research on technical analysis, you are familiar with the terms ‘support and resistance levels’. Breakout trading uses the moments when the price breaks those levels and continues the trend, marking it as exceptionally strong. As opposed to the momentum trading strategy, this one is waiting for the price to break its pattern - that’s when you get the opportunity to earn.


Preparations are extremely important when it comes to this type of strategy. You need to closely monitor an asset with strong support and resistance levels, set definite goals, and make sure that you close the deal towards the market close.


You should research more about breakout strategy if:


You know when to quit


You control your emotions


You enjoy technical analysis


You prefer assets that have high volatility


News trading

Despite the news being an essential driving force for the market, beginners tend to avoid news trading as their main strategy. Linking all your plans on major news releases demands a certain level of experience, but you can incorporate the elements of this strategy in your earlier stages of trading.


This strategy involves a bigger amount of risks than usual and requires a thorough analysis of the situation. If you trade based on the news, the economic calendar should be your best friend, as well as a live feed of major events that happen around the world.


Traders have 3 major options: trading before, during, and after a release. These options are suitable for different groups of investors, trading before the news release being the most low-risk friendly among them.


News trading is something you should try if:


You have experience in fundamental analysis


You are very peculiar about your risk management options


You control your emotions well


Of course, there are hundreds of different trading strategies, however, these four will help you find the direction in which you would like to develop your trading style. Don’t forget that every strategy needs practice - spend a few days or even weeks testing them with different assets, write down your results, and don’t be afraid to drop the ones that don’t work for you at all.