What trading strategies are found in the financial market?

These are more simple trading systems, which are used by private traders. These strategies are often based on technical analysis.

These strategies could be divided into several categories.

By the trading style:

• Scalping – 10-100 trades a day, analyzing M1 (1-minute) or M5 (5-minute) charts. Profit from every trade is several points. Trades are held from several seconds to several minutes.

• Intraday trading – 2-5 trades a day, analyzing M30 (30-minute) or H1 (1-hour) charts. Profit from every trade is several dozens of points. Trades are held from several minutes to several hours. Positions are closed the same day to avoid the risk of strong night moves and price gaps.
• Swing trading – 1-2 trades a week, analyzing D (daily) charts. Profit from every trade is several dozens or hundreds of points. Traders do not need to constantly monitor the charts and positions during the day since positions are held for more than one day.
• Position trading – 1-2 trades a year, analyzing W (weekly) and M (monthly) charts. These are long-term trading strategies, under which trades are held for several months and more.

More details about the trading styles.

By the analysis method:

• Strategies, based on fundamental analysis. They mean making decisions on the basis of geopolitical and economic factors, which influence a financial asset (interest rates, GDP, elections, terrorist attacks, epidemics, poor harvest and so on). These could be both long-term and short-term trading systems. An example of a short-term strategy could be trading on the news. Trades are executed before or after publication of an important piece of news in the hope of a strong price impulse in the expected direction after the news publication.
• Strategies, based on technical analysis. They use analysis of the past price movement and indicator dynamics for forecasting movement in the future.
  There are 4 types of technical analysis: charts, indicators, Japanese candles and waves. These could be short-term and middle-term trading systems.

By the market state:

• Trend Following is a trading strategy, under which a trend is identified first and then entry points are identified in accordance with the current market trend. This strategy is based on the theory that, most probably, the prices would continue to move in the direction of the previous movement.
• Retracement trading is a trading system, under which entry points are identified by the current main trend but after an interim retracement (rollback). This strategy is based on the theory that the prices never move along absolutely straight lines between highs and lows and usually ‘take rest’.

• Non-Directional trading is a bounce from the levels. This strategy is for trading in the times of a quiet market. First, it is necessary to identify the range, within which the price has stayed for some time. The price range is limited by the resistance and support levels. Trades are executed on the price return to this range.

• Breakout trading. Traders identify a breakout of the current price range and execute trades in the breakout direction. This strategy is based on the theory that the trend, after a strong breakout, would, most probably, continue to move in the direction of the breakout.
• Reversal trading is a trading system, the aim of which is to identify the price reversal and the end of the current trend. This strategy is considered to be the most complex and risky one, since it is difficult to identify true price reversals.

By the highly risky trading methods:

• Pyramiding – this trading system assumes the next trade opening in a double size if the previous position brought profit. In other words, it means accumulation of a position. It is designed for working along the trend.
• Locking – this trading system assumes opening a long in the event of an available short. And vice versa – entry into sells with an available long position. This action mostly refers to the Forex market, since it is not allowed to have a long and a short simultaneously on the official exchange (at least, for a regular trader on one account).
• Averaging – this trading system assumes opening further trades in the direction of a loss-making trade with an increased or standard lot and closing all trades simultaneously when they reach the set level. Example – martingale.

These are very dangerous methods, which are not recommended for beginner traders.

Trading strategies are important and necessary conditions for achieving success. However, there are so many of them. What to do with this wide variety?

1st step: In order to acquire experience, you need to select a trading strategy, which would correspond with:

• your goals. Do you want to master the profession of a trader or are you interested in some investment income?
• your time. How much time will you be able to dedicate to trading on a regular basis? More details here: how to combine trading and employment.
• your personality. Are you a gambler? What is your attitude to risk?

Perhaps, swing trading without risky methods of capital management is an optimal direction for a beginner trader, which allows combining his own and new specialties.

2nd step: Master new trading strategies in order to build own portfolio of trading strategies. Trading strategies will produce mixed results since the market situation changes. The only solution to this problem is a trading portfolio consisting of different strategies.

3rd step: Study trading strategies in theory and apply them in practice with the use of progressive platforms for the market analysis – for example, master the volume analysis with the help of the ATAS trading platform.

Wish you all profitable investments and trades!