One of the core aspects of trading – of any kind – is having the most informed and effective strategies for each trade.
Establishing the best approach to every trade, from the way you analyse the markets down to how you manage the open position, is essential to the success of your trading journey.
Therefore, whether you’re new to trading, or already an experienced investor, it’s beneficial to explore the different strategies you can incorporate in your trades.
In light of this, this article will guide you through the ultimate trading strategies, to help you create the highest chance for profit and minimal risk across every trade.
Position trading is a great strategy for many traders, and should certainly be in your arsenal of approaches to trading.
The aim of this strategy is to make long-term profits from fewer positions, which are opened over prolonged periods at time.
For instance, you could trade contracts for difference (CFDs) on the stock market, and only have three positions open for the coming weeks, months, or in some cases, years.
If you conduct thorough analysis, you can often find instances where a certain asset is set to begin a specific trend or pattern which will last a lengthy period – a steady rise or decline over the next few months, for instance.
When you execute these types of trades, your positions are held for much longer, but when it comes time to close them, you could see yourself gain significant profits for each successful trade.
Day trading is a highly popular strategy, used among millions of traders worldwide on various financial markets.
The number of positions you open in this strategy is up to you, but the main component of this approach is to ensure whatever positions are opened, you close by the end of the day.
The goal of opening and closing positions within the 24-hour period, is to benefit from the daily movements and changes of value in the markets.
Many financial markets are highly volatile, meaning there can be significant fluctuations all in the space of a day.
For an expert day trader, this means there’s potential for profit, as accurate positions opened on these moving assets can bring great rewards.
With day trading, you can also have better control over your trades, as you don’t have any positions open overnight, which could change drastically without you knowing till the following morning.
Another great strategy for traders is to use swing trading.
This is where you open positions specifically to profit from the rapid price swings in the market.
When you effectively analyse trends and patterns, you’ll be able to spot any instances where an asset’s value is set to swing one way or another.
For many traders, this is a preferred strategy over positions on slower, steadier moving assets.
Choose the most appropriate moment at a predicted price swing, where you can open your position at a certain value, and close it when the value reaches either your desired higher or lower price.
Be sure to close the position when you best see fit, to avoid the price levelling out again, or potentially swinging in the other, unfavorable direction. Now if this is something that you have considered before, there are websites that can help you how to find stocks for swing trading.
It’s highly beneficial to understand how scalping trading works, as this could become the best strategy for you to use on certain trades.
This involves opening multiple positions on assets, but only for very short periods of time – essentially the opposite of position trading.
The period of time can range from a few minutes, to a matter of seconds.
With this strategy, you can make small profits from each incremental change in an asset’s price value.
By the end of the day, for instance, your multiple profits from several trades could amount to a satisfying overall profit.
Scalping trading is also good for minimising risk, as the positions are only open for very short periods, meaning there’s less chance of prices moving drastically in unfavourable directions, compared to over longer periods of time.
Trading strategies are an integral part of your trading journey, and with these expert strategies to hand, you’ll have everything you need to start approaching trades more accurately and successfully.