Professional trading strategies: 7 Trading Strategies Every Trader Should Know

These 20 rules are tips that long-time pros use to stay in the winner’s circle. As much as possible you want to trade as close as possible towards the area of value. Because it gives you a tighter stop loss which improves your risk to reward on the trade. And if you go down to a lower timeframe, you can find opportunities to enter a trade before the break of the highs or the lows. With higher profits also comes higher risk. Unlike some other investment products, with Forex or other CFD strategies you can speculate to increase or decrease in market prices.

A buildup is when a tight consolidation forms prior to the breakout, or sometimes it can be after the breakout as well. These are places where traders will look to potentially short the markets, which means there is not much room for your trade to run up higher. And if the price continues lower, this cluster of stop loss will get triggered which will induce further selling pressure. Imagine if the price were to continue lower, these clusters of stop loss will get triggered and that will induce further selling pressure. It’s about trading reversals, buying breakouts, buying pullbacks, knowing when to stay in the markets and when to stay out of the markets.

As scalping requires larger position sizes than other trading styles, traders need to be extremely disciplined. Scalpers do not hold overnight positions and most trades only last for a few minutes at maximum. Some trades will be held overnight, incurring additional risks, but this can be mitigated by placing a stop-loss order on your positions. Swing trading can be more suitable for people with limited time in comparison to other trading strategies. However, it does require some research to understand how oscillation patterns work.

When it comes to price action trading, most traders will buy at support and sell at resistance, or wait for bullish candlestick patterns to form as confirmation, etc. Selecting a trading strategy doesn’t have to be complicated and you don’t have to stick with just one. A key thing to remember is that the best traders are adaptable and can change their trading strategy based on opportunities. Therefore, it’s a good idea to learn about each individual trading strategy and by combining different approaches to trading, you will become adaptive to each situation.

Start with a clear and concise plan with proven strategies and then leverage the 20 rules that follow. Similar to other short-term styles, intra-day trading requires discipline. Traders should utilise a pre-determined strategy, complete with entry and exit levels, to manage their risk. News traders need to understand how certain announcements will affect their positions and the wider financial market. Additionally, they need to be able to understand news from a market perspective and not only subjectively. Behavioral finance has uncovered several psychological biases and cognitive errors that can hurt a trader’s performance.

Benefits of trend trading

Swing traders aim to ‘buy’ a security when they suspect that the market will rise. Otherwise, they can ‘sell’ an asset when they suspect that the price will fall. Swing traders take advantage of the market’s oscillations as the price swings back and forth, from an overbought to oversold state. When it comes to trading strategies, they can all perform well under specific market conditions; the best trading strategy is a subjective matter. However, it’s recommended to pick a trading strategy based on your personality type, level of discipline, available capital, risk tolerance and availability.

Because you’ll have a logical place to set your stop loss. You can now set your stop loss just below the lows of this buildup. Let’s say market made a fast and strong bullish or bearish move, that’s what I call a strong momentum. Now you can just sit back and watch the results of your chosen trading strategy.

Trading strategies every trader should know

However, with enough confidence in their trading system, the trend trader should be able to stay disciplined and follow their rules. However, it’s equally important to know when your system has stopped working. This usually occurs due to a fundamental market change, therefore it’s important to cut your losses short and let your profits run when trend trading. The end-of-day trading strategy involves trading near the close of markets. End-of-day traders become active when it becomes clear that the price is going to ‘settle’ or close. Markets need energy to move and this comes from information flow such as news releases.

Understanding these differences in market expectations is crucial to success when using a news trading strategy. Most traders fail to tap their full potential, eventually cashing in their chips and finding more traditional ways to make money. Become a proud member of the professional minority by following classic rules designed to keep a razor-sharp focus on profitability.

You need to be 18 years old or legal age as determined by the laws of the country where you live in order to become our client. The swap is a commission paid to the broker. If the position is open for a long period of time, the swaps can accumulate a large amount. Traders can analyse charts and place market orders either in the morning or at night, so it can be significantly less time consuming in comparison to other strategies. Market expectations and market reactions can be even more important than news releases. Open a trading account to get access to our platform.

Engage Your Trading Plan

Therefore, it’s common that news is already factored into the assets price. This results from traders attempting to predict the results of future news announcements and in turn, the market’s response. A news trading strategy is particularly useful for volatile markets, including when trading oil and other fluctuating commodities. Trend traders do not have a fixed view of where the market should go or in which direction. Success in trend trading can be defined by having an accurate system to firstly determine and then follow trends.

You can follow crucial news announcements by monitoring our economic calendar. Stock trading involves buying and selling shares of publicly traded companies. It typically happens in the United States on exchanges like the New York Stock Exchange or the Nasdaq stock market. Some traders try to make up for insufficient skills with expensive software, prepackaged with all sorts of proprietary buy and sell signals. These tools can interfere with valuable experience when you think the software is smarter than you are.

Make Peace With Losses

You’ll realize that the area of value is at the 50-period moving average as the price has tested it 4 times. You can use the 20 MA to serve as a guideline. You’ll notice that the 20 MA starts to touch the lows of the buildup. This range of the candles is getting smaller compared to the previous range of the candles on the left when volatility expanded. If the price is like walking down the stairs, slowly creeping into support, I’m not looking to buy at this point.

These points are also referred to as ‘pullbacks’ or ‘dips’ in an existing trend. Entering and exiting a trade is based on how the market interprets the news, which is commonly outlined in a trader’s plan. Over the long run, active investment strategies (i.e. stock picking) tend to underperform the broader market, especially after taking into account transaction costs and taxes.

This is when some positions do not move within the day, which is to be expected. When a new momentum high is made, traders will look to the highest probability trade, which is usually to buy the first pullback. However, when a new momentum low is made, traders tend to look to sell the first rally. The Martingale system is a system in which the dollar value of trades increases after losses, or position size increases with a smaller portfolio size. Any person who commits capital with the expectation of financial returns is an investor.