Common strategies for trading

Common strategies for trading

If you want to be a successful trader, you will have to learn about the common trading strategies. A strategy will help you stay consistent in your decision making, and avoid reliance on your emotional instincts.

 

To help you choose a strategy, we have compiled a short list of these strategies for you to choose from. The general trend is that these strategies get increasingly more expensive and risky, but also less intense.

Scalping

Scalping is the most faced-paced type of trading out there. A trader using this strategy will be opening and closing deals in a matter of minutes. Here, traders do not try to look at the bigger picture. Instead, they take advantage of every minuscule price fluctuation, from which they intend to profit. The profits here are very small on each individual trade. However, they do add up quickly to a considerable sum as traders make so many of these trades. This is the sort of trading done when the trader has very little liquidity, and can’t take great risks. It does need a lot of attention to the charts as a result, however

Day Trading

Day trading gives traders a bit of room to breathe. Trades are still relatively fast, usually within an hour. It relies on looking at chart patterns for an indication of short term trends. The liquidity needed for these trades is slightly higher, but traders do not need to spend quite as much time on the job.

Swing trading

This strategy allows traders to relax. They can look at longer-term trends, and plan for a trade taking place over days or weeks. The core of the strategy is waiting for an asset value to swing, or reverse in a certain direction. With this type of strategy, traders will need even more liquidity as risks are higher

Position trading

This is the final type of trading we shall present. It is the most relaxed, as the time span for these trades is months, maybe years. As such, this type of strategy is usually done when trading is not a career, as a side project. For these types of trades, traders must pay attention to sources other than the charts, like the news. This is the most expensive and risky type of strategy, so plenty of leftover liquidity is a necessity.

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