If you approach trading professionally, you understand that it is not just a hobby or a source of additional income but a complex multi-level field. It does not allow chaotic, ill-considered, and impulsive decisions. Instead, a key element of success in trading is having a clear and consistent strategy that a person follows. In this article, we will analyze which trading strategies are the most relevant and effective in today’s market conditions.
This strategy represents one of the most popular approaches common among those who view trading as a full-fledged profession rather than a hobby or a source of additional income. It requires significant time and attention because, within this model, traders must respond quickly to market fluctuations occurring in small temporal segments. In the most general terms, this strategy can be described as opening short-term positions during the day, with the mandatory closure of all of them before the end of trading. Thus, day traders can derive profit from short-term market fluctuations. This strategy is one of the least risky because the trader does not leave the terminal unattended and can always quickly close the position in which threatening trends are beginning to emerge. At the same time, the low risks of day trading are balanced by low opportunities since the profits that a person can get in short periods of time are lower than long-term ones.
In its essence, this strategy is the complete opposite of day trading. As part of position trading, a person opens a position and holds it for a long period of time (in some cases, up to several years). To some extent, position trading can be seen as a phenomenon close to investing. Traders who resort to this strategy rely heavily on fundamental analysis in an attempt to predict which assets will increase in price significantly in the long run. The main advantage of choosing this model is the ability to make significant profits and the lack of constant stress experienced by traders who conclude deals within shorter periods of time. In turn, relying on this strategy, you risk missing the moment when the price of the asset reaches its highest point and begins to reverse. Therefore, this model has both advantages and shortcomings.
The principles of swing trading are as simple as it gets: when you predict that an asset will grow in price, you buy it. When, on the other hand, your forecasts identify that an asset’s price is likely to decrease, you sell it. In essence, swing traders are constantly monitoring the markets to see in which direction asset prices will move. Unlike traders who follow other strategies, proponents of this model never go against trading figures. Of all the strategies, this model relies most on technical analysis. So, to be a swing trader, you have to master the trading tools, charts, and indicators. Fortunately, you do not have to look for them for a long time because the most popular of these tools are built into trading terminals. In turn, brokers provide you with free access to these terminals. For example, with NSBroker, you are free to use the MetaTrader 5 platform, which contains such key indicators as BB MACD, Bollinger Bands, Stochastic, and other advanced trading tools. With them, you will be able to gain a fundamental understanding of the market patterns needed to become a swing trader.
If the previous strategy is based mainly on technical analysis, those who choose news trading use the fundamental one. Fundamental analysis includes research on news in a wide variety of areas, from economics to politics and sociology, that can affect market fluctuations. In order to engage in news trading, you need to understand what specific consequences for the market may result from certain events. For example, in the spring of 2021, Tesla announced its refusal to accept payment for its products in Bitcoin. This situation led to a huge collapse in the price of cryptocurrencies. News traders could have anticipated this effect in the first minutes after the news appeared on social media and taken appropriate measures to not only avoid the negative consequences of this market shift but, on the contrary, profit from it. News trading can bring significant benefits to those who choose it; at the same time, it requires people to have an in-depth understanding of the holistic nature of markets and be able to correctly interpret certain information drives.
In addition to these four strategies, there are numerous other models. However, in the turbulent conditions of recent years, market volatility has increased significantly, making the approaches described above the most common and appropriate for today’s world. You can choose between them or create your own strategy to succeed in trading. In this context, your most important task is to streamline your behavior in the market and ensure its systematic character, eliminating any factors of chaos and uncertainty. Only then will you be able to confidently start your pursuit of trading success.