Trading in the financial markets means you will have to make a decision to buy or sell a security. You also have to decide when to stop and just observe. Of course, it’s a complicated market. So, you need good trading strategies to ensure that the decisions you make are correct.
Here are some of the top trading strategies you should consider trying.
Day Trading
Day trading refers to the trading strategy in which you buy and sell multiple securities in the course of one trading day.
This is particularly evident when you see that active traders rarely ever hold a position overnight or several days.
For day traders, the most common timeframes are four-hour charts, one-hour charts, or even 15-minute charts.
Although this trading strategy can be very profitable, it’s also among the most difficult strategies to master. So, you must be careful when you try to adopt this as your strategy.
Swing Trading
Swing trading is a strategy that lets traders buy and sell assets and hold them for several days and even weeks.
Swing traders follow the market’s trend, so they are also called trend-following traders, or simply trend followers.
Swing traders use fundamental information or multiple timeframe analysis to conduct their trades, partly because they hold positions for multiple days and weeks, as we’ve mentioned.
Position Trading
With position trading, the trader will buy and sell securities and then hold them for several weeks or even months.
Position traders use a mix of daily, weekly, and monthly charts when they make their trades. More importantly, they use fundamental analysis to guide them in their trading decisions.
This means that a position trader doesn’t really much care about short-term price fluctuations. What they are concerned about is the bigger picture and the long-term outlook of the markets.
Algorithmic Trading Strategies
Algorithmic trading strategies are trading strategies in which traders get the help of computer programs to enter and exit trades.
The trader will input a set of rules and conditions and trading parameters to tell the program when and how to act when such conditions are fulfilled.
These trading strategies go by many names, such as algo trading, black-box trading, robot trading, or automated trading.
As opposed to position trading, many algorithmic trading strategies try to benefit from very small price movements in a high-frequency manner.
Seasonal Trading
This one has something to do with the timing of the market movements. As you can see on price histories, there are trends in the market that get repeated every year.
As weather, government, economic, and corporate patterns exist, seasonal trends in the market continue to show themselves to traders.
When they make trading decisions, seasonal traders will focus on these patterns and check the history to know how current market conditions will bring about or reject the previously shown pattern or trend.
Investing
While the name sounds a lot like trading in general, investing strategies are generally for traders who aim to hold assets for long and wait for prices to grow.
Among the most popular investing strategies are growth investing and value investing.