6 Top Trading Strategies For 2023!
Trading strategies help to navigate the world's financial markets in a structured and systemised way. A trading strategy helps the individual trader to make high-quality trading decisions.
But what is a good trading strategy? In this 'Trading Strategies' guide, we cover the six different types of trading strategies and trading techniques that every trader should know.
Table of Contents
- What is a Trading Strategy?
- The Top Six Types Of Trading Strategies
- 1. Day Trading Strategies
- 2. Swing Trading Strategies
- 3. Position Trading Strategies
- 4. Algorithmic Trading Strategies
- 5. Seasonal Trading Strategies
- 6. Long-Term Trading Strategies
- Best Platform for Trading Strategies
- Top Trading Strategies by Asset Class
- Forex Trading Strategies
- Stock Trading Strategies
- Commodity Trading Strategies
- Index Trading Strategies
- Conclusion - Trading Strategies 2023
- FAQs on Trading Strategies
What is a Trading Strategy?
A trading strategy is a list of rules that defines the exact parameters a trader needs to execute a trade. The list of rules can include analysis of chart patterns, price action patterns, technical indicators or fundamental analysis. Popular trading strategies include day trading, swing trading and seasonal strategies.
Trading strategies are used to streamline the process of analysing information about what the market is doing by creating a set of rules, or a methodology, to make a trading decision. The vast amount of trading techniques and methods can be overwhelming. Having a list of rules provides structure, focus and consistency in analysing the market.
The Top Six Types Of Trading Strategies
There are different types of trading strategies and trading techniques to choose from. While the number of strategy methods may seem daunting, it is also one of the reasons individuals from all walks of life participate in the financial markets - there is usually something for everyone!
Whether short-term trading, long-term trading, or investing, most trading strategies will fall under the different trading methods outlined below.
What are the top types of trading strategies:
- Day Trading
- Swing Trading
- Positional Trading
- Algorithmic Trading
- Seasonal Trading
- Investing Strategies
These types of trading strategies are covered in more detail below.
1. Day Trading Strategies
What is day trading? Day trading is a style in which traders buy and sell multiple securities within a single trading day, often exiting by the end of the day. In fact, it is rare for active day traders to hold positions overnight, let alone for several days. The most common chart timeframes used in day trading strategies are the four-hour, one-hour, thirty-minute and fifteen-minute charts.
Many new traders gravitate towards day trading as they are enticed by the possibility of making profitable trades multiple times, in just one day. While day trading can certainly be lucrative, it is also the most challenging to master and can result in big losses for the untrained. In fact, it is not advisable for most to make multiple high-risk financial decisions in a short period of time, unless they have gone through significant training and conditioning.
Learn more in the Day Trading Stocks Guide and Day Trading Forex Guide.
How To Create A Day Trading Strategy
While day trading is challenging, it is possible to learn day trading techniques and practice a day trading strategy until it is mastered. Whether it is day trading stocks or day trading forex, there are some key elements to crafting a day trading strategy, such as:
- Which markets will you trade on? Many focus on day trading stocks, but day trading techniques can be used on any major market. As day traders take many trades for very short-term price movements, choosing markets which offer low commissions and small spreads is essential.
- What timeframe will you focus on? There are multiple types of day trading timeframes to choose from. Pick a timeframe that suits your availability, so you can become familiar with how it moves.
- What tools will you use to enter and exit trades? When learning how to day trade, there are vast amounts of trading indicators available to you. Focus on one or two to really master how they work.
- How much will you risk per trade? Trade sizing and risk management are very important. You don't want to risk too much per trade as it is likely you will have a string of back-to-back losers at some point in your trading career.
Day Trading Strategy Example
The chart above shows the price behaviour of a currency pair across a two-day trading period. Having a day trading strategy written down is hugely important, as the day trader is faced with lots of random price movements that form multiple market conditions and trends (upward, downward and sideways price movement). Each of these requires different day trading techniques.
Trading indicators, such as moving averages, are popular for day traders as they can be useful in differentiating between changing market conditions. Let's plot a moving average on the same price chart as above, as a day trader would.
The blue line represents a twenty-period moving average of the closing price of the prior twenty bars. When creating a day trading strategy, the trader can use this to create a rule, or condition, for trading:
- Rule 1: When the price is above the moving average, only look for long, or buy, trades.
- Rule 2: When the price is below the moving average, only look for short, or sell, trades.
These two simple rules can help streamline and focus the day traders' decision-making process. The number of rules within an effective trading strategy will vary. In this example, the moving average has helped to filter for direction. The trader still needs conditions for timing entries and exits, as well as risk sizing and overall portfolio risk management.
You will find more detailed trading strategies when we cover specific strategies for forex, stocks, commodities and indices after we have finished going through the six major types of trading strategies, within this section. For now, let's focus on what is swing trading - the second type of trading strategy.
2. Swing Trading Strategies
What is swing trading? Swing trading is a method in which traders buy and sell securities with the purpose of holding for several days and, in some cases, weeks. Swing traders, also known as trend-following traders, will often use the daily chart to enter trades that are in line with the overall trend of the market.
Some swing trading strategies only use the technical analysis of a price chart to make trading decisions. However, it is common that swing trading strategies also use fundamental information, or multiple time frame analysis, as more detail is required to help in holding trades for several days or longer.
Swing Trading Strategy Example
One of the more popular trading techniques for swing trading is to use trading indicators. There are many different types of swing trading indicators in the marketplace and they all have pros and cons to them. So what are the best indicators for swing trading? Many swing traders will use the Stochastic Oscillator, MACD or Relative Strength Index (RSI) to identify clues in price continuing a trend or changing direction.
Ultimately, the best indicators for swing trading are going to be the ones you have tested and have learnt to become familiar with. Let's look at an example of a swing trading chart:
Most swing trading strategy charts have three components:
- Daily chart bars, or candles. This means each bar, or candle, represents one day's worth of trading.
- A trend filter. In the above example chart, a fifty-period moving average is used as a trend filter and is denoted by the red wavy line moving through the price bars.
- An overbought and oversold indicator. In the above example chart, a Stochastic Oscillator is used to identify overbought and oversold conditions and is found at the bottom of the chart.
Since a trading strategy is simply a methodology to help in a trader's decision-making process, a trading strategy can be made using the three components listed above. For example:
- Rule 1: When the price is trading above the moving average, only enter long, or buy, trades. When the market is trading below the moving average, only enter short, or sell, trades.
- Rule 2: Only enter a long trade if the Stochastic Oscillator is below 20, as this represents the oversold territory. Only enter a short trade if the Stochastic Oscillator is above 80, as this represents the overbought territory.
Using these two basic rules would result in traders identifying entry levels in the gold boxes found in the chart below:
These simple rules can serve as a starting point to help the trader in trading with the trend and timing their entries. Of course, proper swing trading strategies will include additional rules to address specific bar patterns, or support and resistance levels for entry price and stop loss placement, as well as higher timeframe analysis to identify take profit levels - as swing traders aim to hold trades for several days or more.
When using the best indicators for swing trading, it can help to systematise an approach within the overall trading strategy so you're not left wondering what the indicator is actually telling you. Preparation is key to success when trading the markets.
3. Position Trading Strategies
What is positional trading? Positional trading is a style in which traders buy and sell securities for the purpose of holding for several weeks or months. A position trader will typically use a combination of daily, weekly and monthly charts, alongside some type of fundamental analysis in their trading decisions. Essentially, a position trader is an active investor, as they are less concerned about short-term fluctuations in the market and look to hold trades for a longer term.
The key focus for a position trader is the reward to risk of a trade. Typically, as a position trader is looking to hold trades for several weeks or months, they often have lots of very small losing trades before one big winning trade. This allows the position trader to risk small amounts per trade, in order to increase the frequency of the number of trades taken so they can diversify their portfolio.
Positional Trading Strategy Example
Most position trading strategy charts have three main components:
- Daily chart timeframe or above (weekly or monthly chart).
- A trend filter. In the above example chart, a one hundred period moving average is used as a trend filter and is denoted by the orange wavy line moving through the chart.
- A trend reversal momentum indicator. In the above example chart, a MACD Oscillator is used to identify changing momentum and is found at the bottom of the chart.
As trading strategies are simply a set of rules and conditions to help in a trader's decision-making process, a trading strategy can be made using the three components listed above. For example:
- Rule 1: When the price is trading above the moving average, only enter long, or buy, trades. When the market is trading below the moving average, only enter short, or sell, trades.
- Rule 2: Only enter a long trade if the MACD Oscillator is above 0, as this represents momentum turning bullish. Only enter a short trade if the MACD Oscillator is below 0, as this represents momentum turning bearish.
In the chart above, the period in which both rules are met - price above the one hundred moving average and the MACD Oscillator above 0 - also represents the longest trending period. Of course, the trader still needs to find the right time to execute the trade and even if this is done correctly, momentum could turn in the opposite way, resulting in a losing trade.
However, it is these long-term trending conditions that a position trader tries to identify for trading purposes.
4. Algorithmic Trading Strategies
What is algorithmic trading? Algorithmic trading is a method in which the trader uses computer programmes to enter and exit trades. The trader will code a set of rules and conditions for the computer programme to act on. Algorithmic trading is also known as algo trading, automated trading, black-box trading, or robot trading.
Most algo trading strategies try to take advantage of very small price movements in a high-frequency manner. Many new traders are enticed by having algorithmic trading strategies to enter and exit trades when they are not there. Unfortunately, the lure of riches in algorithmic trading lends itself to many trading scams so beware.
While there are certainly more failed algo trading strategies than successful ones, there are a number of traders who manage to harness the power of algorithmic trading with discretionary, human trading. Many traders will use investment algorithms, or stock market algorithms, to help search for certain fundamental or technical conditions that form part of their trading strategies.
In effect, the algorithm acts as a scanner of potential markets to focus on. The trader can then focus on analysing the rest of the chart, using their own strategy methods and trading techniques.
For example, the Admirals Premium Analytics section uses algorithms to help identify technical analysis events on different markets such as stocks and forex. Below is a screenshot showing the Featured Ideas section.
5. Seasonal Trading Strategies
What is seasonality? Seasonal trading involves trading the possibility of a repeatable trend year in, and year out. Many markets often exhibit seasonal characteristics due to repeatable patterns in weather, government economic announcements and corporate earnings.
A seasonal trader would use these seasonal patterns as a statistical edge in their trade selection. So, while seasonal trading is not a buy, or sell, timing system it can give the trader the bigger picture context they need within their trading strategies and strategy methods.
Seasonal Trading Strategies
One of the more popular types of seasonal investing strategies forms part of a popular stock trading strategy. There is an old saying in trading, 'sell in May and go away'. This trading wit represents the typical seasonal weakness the stock market experiences during the summer months between May and October.
According to the Financial Analyst Journal in 2013, a study which observed this phenomenon found it did exist between 1998 and 2012 with stock returns giving higher returns in the November to April period than in the May to October period. This doesn't necessarily mean the summer months were overall negative, however.
However, the observation does occur in another popular seasonal stock trading strategy which is the 'Santa Claus Rally'. This is the tendency for stock markets to rally during the last five trading days of the year and the first two of the new year.
It is important to remember that seasonal trading merely provides an extra edge to a trading strategy. A seasonal trader would also look at other indicators and tools to identify markets which offer the best clarity to trade on and never solely rely just on one measure of analysis.
6. Long-Term Trading Strategies
Investment strategies and trading strategies can have a lot of similarities but have one major difference. Investing strategies are designed for investors to hold positions for long-term, while trading strategies are designed to execute more short-term positions.
Most investment strategies are designed as a stock investment strategy as buying into profitable companies can, theoretically, have unlimited upside potential. When buying shares in a physical company, the downside is not unlimited. However, if the company goes bankrupt that can mean the investor will lose all of their investment.
When investors are formulating their rules or conditions, for their investment strategies, it is common to try and replicate the metrics of stand-out companies such as Amazon or Facebook. However, while this is no easy feat there are plenty of other companies that investors try to position themselves in according to specific investing styles, such as:
- Growth Investing. Strategy methods that focus on growth investing aim to identify stocks that exhibit the best 'growth' prospects. Generally speaking, this means identifying companies that are in the mature stage of their business cycle. For example, technology shares appeal to many growth-based investors as these types of companies typically go public to raise capital, in order to mature the company even more.
- Value Investing. Strategy methods that focus on value investing aim to identify stocks that exhibit the best 'value' for money. Growth stocks are typically priced high as they offer the best future prospects. Value-based stocks are companies that are typically trading at a discount due to recent negative news announcements or poor management. Value investors will look for changes in the company's circumstances and invest in the turnaround story of the company.
The Invest.MT5 account provides access to stocks and ETFs across 15 of the world's largest stock exchanges. Other benefits include free real-time market data, premium market updates, zero account maintenance fees, low transaction commissions, and dividend payouts.
Best Platform for Trading Strategies
Having the ability to access a stable and secure trading platform is essential in today's fast-moving markets. The best trading platforms allow you to view historical price charts of the instrument you are trading, as well as provide you with the order tickets you need to place and manage your trades.
Thanks to significant advances in technology, you can now have your charting platform and brokerage platform all in one place thanks to the Admirals MetaTrader suite of trading platforms which include:
- MetaTrader 4
- MetaTrader 5
- MetaTrader WebTrader
- MetaTrader Supreme Edition (A custom plugin for MetaTrader 4 and MetaTrader 5, created by Admirals and professional trading experts)
Through the platforms mentioned above, you can trade all types of instruments and trading strategies such as forex strategies, stock trading strategies, CFD (contracts for difference) strategies, commodity trading strategies and index trading strategies. In fact, you can access more than 8,000+ instruments, as well as news announcements and advanced trading tools.
Most importantly, with these platforms, you have access to a large library of trading indicators which can be very helpful when following and developing different trading strategies for different markets. Some of the world's most popular trading indicators are available completely free on the MetaTrader trading platforms, such as the:
- RSI Indicator
- Bollinger Bands Indicator
- MACD Indicator
- Ichimoku Indicators
- And many more advanced trading indicators
Top Trading Strategies by Asset Class
In this section, you will find a variety of trading strategies for different markets. It's important to remember that an effective trading strategy is designed to streamline the process of trading information by creating a set of rules, or methodology, to make a trading decision.
Most beginning traders believe an effective trading strategy is one that wins 100% of the time and will spend most of their waking hours trying to search for a holy grail system. While some websites will market these 'holy grail systems' to the uneducated, it is worth remembering that they simply do not exist.
A trading strategy with sound risk management principles can give a trader an edge, over time. However, this will come with winning and losing trades. After all, anything can happen in the market at any point in time. The strategies below are designed to demonstrate the different possibilities available to traders, as well as act as a starting point to create a more thorough and detailed set of rules.
Let's get started!
Forex Trading Strategies
The foreign exchange market is ideal for nearly all different types of strategy such as day trading, swing trading, algorithmic trading and more. This is due to the fact that the forex market is open 24 hours a day, five days a week, making it one of the most liquid markets available to trade on.
EUR/USD Currency Trading Strategy Example
As the currency market is open Monday to Friday, instruments like the EUR/USD can exhibit multiple types of market conditions in a short period of time such as an uptrend, a downtrend and a sideways market range. This is why some traders use Bollinger Bands in their EUR/USD currency trading strategy.
Bollinger Bands are used to identify markets which are quiet, and often moving sideways, as well as markets that are showing increased volatility and are about to trend in a certain direction. The Bollinger Band tool itself is comprised of three lines. The middle line is a 20-day simple moving average (SMA) and is used to calculate the value of the upper and lower bands. These bands are two standard deviations away from the 20-day simple moving average (SMA).
As the standard deviation is a measure of volatility, many rules around the Bollinger Band focus on the upper and low band movements, such as:
- Rule 1: When the bands widen, the market is more volatile and could start to trend.
- Rule 2: When the bands contract, the market is less volatile and could develop into a sideways ranging market.
Let's have a look at an hourly chart of the EUR/USD with the Bollinger Bands indicator.
In the above chart, the three green lines represent the Bollinger Bands indicator. The gold-coloured boxes represent periods of time when the Bollinger Bands are contracting. In most cases, the market's price action did move in a sideways range but for different amounts of time. There were other periods of time where the market did move in a sideways range but the Bollinger Bands had not contracted, meaning the indicator can often lag behind live price.
Now let us look at the period of time when the Bollinger Bands expanded.
In this chart, the blue boxes show times when the Bollinger Bands notably expanded. In most cases, price action did break out on heightened volatility and move in a short-term trend, with some moving up and moving down. As these trend-based moves offer larger price movements, using the widening of the bands as a rule in a Bollinger Bands forex trading strategy may prove to be more useful.
As the Bollinger Bands measure for volatility rather than the direction of the trend, some traders add a trend filter, such as a long-term moving average, within their Bollinger Bands forex trading strategy. This is because a moving average shows the average price for a certain number of historical bars - making it very useful to quickly identify the overall price direction. For example:
- Rule 3: Only buy, or trade long, when the price is above the 200 exponential moving average (200 EMA).
- Rule 4: Only sell, or trade short, when the price is below the 200 exponential moving average (200 EMA).
The orange line in the chart below shows the 200 exponential moving average (200 EMA), which shows the average price of the last 200 bars. As the exponential moving average is pointing downwards it signifies that - on average - price is moving downwards, helping us to quickly identify the overall trend.
The green boxes show the periods of time when the Bollinger Bands expanded and price breakouts to the downside, below the lower Bollinger Band, and in the direction of the longer-term moving average.
While the additional rules result in a lower amount of trading opportunities, it has served their purpose as an effective trading strategy, which is to streamline the decision-making process for the trader. At this stage, the trader may go on to add more rules regarding the specific entry price, stop loss price, target price and trade size to further streamline their decision-making for any ongoing trading opportunities.
Stock Trading Strategies
The stock market is ideal for nearly all different types of strategy such as a swing trading strategy, position trading strategy, trend following strategy, moving average strategy and a price action strategy, among others. As investors and fund managers tend to buy companies to hold for the long-term - in expectation of a stock price appreciation - trends tend to last longer in this particular market.
Both traders and investors participate in the stock market, lending themselves to a multitude of strategies as listed above. While an investor will buy physical shares in a company, a trader may speculate on the price movement of a stock using CFDs which has certain advantages such as having the ability to trade long and short.
Netflix Position Trading Strategy Example
While there are thousands of companies to trade on, sticking to the companies you know and use on a daily basis can be the simplest place to start - such as trading on Apple, Amazon, Facebook, Tesla or Netflix stock. While there are some differences in how each individual stock trends, there are many more similarities. This makes using one stock strategy, like a position trading strategy, tradeable on a wide range of global stocks.
While the above price chart is of Netflix, it could represent any other stock price. As a company's stock price can often trend for quite some time - if it is in popular demand - many traders utilise the power of the exponential moving average to try and capitalise on trending periods.
One of the most popular ways of using the exponential moving average in a stock strategy is to look for a fast-moving average to cross above a slow-moving average, and vice versa. A fast-moving average is one that is based on a smaller value of historical bars than a slow-moving average, which is based on a higher value of historical bars. A set of rules could start with the following:
- Rule 1: Go long when the 8 exponential moving average crosses above the 21 exponential moving average.
- Rule 2: Go short when the 8 exponential moving average crosses below the 21 exponential moving average.
In this instance, the fast-moving average is the 8-period moving average and the slow-moving average is the 21-period moving average. Both numbers are Fibonacci numbers which are very popular in trading the financial markets. Let's have a look at what this looks like on the Netflix price chart:
In the chart above there are multiple occurrences of the moving average crossing over, both to the upside and the downside. In some cases, price did go on to trend for quite some time, while in other cases it turned in the opposite direction. Let's mark out the exponential moving average crossovers for further study:
The red vertical lines show the instances where the fast-moving average crosses below the slow-moving average. The green vertical lines show the instances where the fast-moving average crossed above the slow-moving average. What can we learn from this?
- On the five occasions where the 8 exponential moving average crossed below the 21 exponential moving average, only twice did the market keep on trending for an extended period to the downside. One issue with moving averages crossovers is that they may get you into the move late and may also give out a false signal.
- On the five occasions where the 8 exponential moving average crossed above the 21 exponential moving average, the market kept on trending higher most of the time. It is in these situations where the trader tries to gain a higher reward relative to the risk they are putting on.
The moving average crossover is essentially a position trading strategy that is well suited to a trend-following stock market strategy. While the placement of stop losses and take profit levels are discretionary it is important to understand this type of strategy will result in more losing trades than winning trades. However, the aim is for the winning trades to offer a reward that is multiple times the risk.
Therefore, it is important to use sound risk management techniques in order to keep the risk per trade small to allow for multiple losing trades before the possibility of a big winning trade.
Commodity Trading Strategies
Trading commodities such as gold, silver, and oil are popular among traders as they can often trend in a directional manner for quite some time. All markets go through different market conditions at some point. However, commodity markets are heavily impacted by supply and demand issues caused by weather patterns, geopolitical tensions and economic sentiment.
The types of strategies which tend to be suitable for commodity trading are typically swing trading strategies, seasonal trading strategies, and position trading strategies. Many traders fuse together elements of swing trading and day trading to trade in very strong trending commodity markets. This enables traders to use some of the lower timeframes, such as the four-hour chart, to identify trend-following trading opportunities.
Brent Crude Oil Commodity Strategy Example
The MACD and RSI indicators are two popular trading indicators that help find markets that are trending, markets that are about to change direction, and overbought and oversold conditions. Here is what both of the indicators look like on a four-hour chart of Brent crude oil:
To beginning traders, the price chart about may seem random and overwhelming. This is why strategy is so important - it can help traders streamline the process of information to aid in their decision-making. So let's start with a set of rules to process what the chart is telling us:
- Rule 1: Go long when the MACD is above its zero line.
- Rule 2: Go short when the MACD is below its zero line.
Essentially, the MACD acts as a broad trend filter to give the trader a directional bias. The next step is to look for clues of overbought and oversold conditions as this could offer the best time to execute a trade. We can use the RSI (4-period setting) to do this:
- Rule 3: Go long when the RSI is below 30 (the lower black line in the RSI indicator window).
- Rule 4: Go short when the RSI is above 70 (the upper black line in the RSI indicator window).
Traders can add further rules for specific entry price levels and stop loss price levels. For example, adding additional rules to look for price action patterns such as hammer and shooting start candles could be useful. Some traders may explore using other indicators like the Average True Range (ATR) to identify price levels for a stop loss. For now, let's identify the areas where rules one to four from above have occurred:
In the price chart above, the green boxes represent occurrences where both rule one and rule three have been met; the MACD above the zero line and the RSI indicator below the 70 line. The red boxes represent occurrences where both rule two and rule four have been met; the MACD below the zero line and the RSI indicator above the 30 line.
It is important to note that these conditions are best suited for very strong trend markets, as the four-hour price chart above shows. It is well worth considering adding more rules, such as moving average alignments, to try and identify these conditions moving forward. Of course, it is inevitable to have losing trades when the market changes direction or market condition. This is why using stop losses and proper risk management techniques are important.
Index Trading Strategies
Index trading is favoured by both short-term and long-term traders due to its ability to offer strong trending conditions on lower timeframes and higher timeframes. This is why trading indices strategies often include day trading strategies, swing trading strategies, position trading strategies, seasonal investing strategies and even hedging strategies.
As global indices attract all types of traders, trading indicators such as the RSI indicator, MACD oscillator, Stochastic oscillator, and Bollinger Bands can be quite effective in trading them in the right market conditions.
While you can trade 19 different global stock indices, short-term traders prefer to focus on the world's major indexes which include the: DAX40, FTSE100, SP500, NQ100, DJI30 and JP225. This covers the major indices from Europe, Asia and the United States. Let's now focus on trading indices strategies for the DAX40 using day trading techniques.
DAX40 Index Trading Strategy
While some traders focus on day trading stocks, many choose to employ day trading techniques on stock market indexes due to low spreads and commissions. For example, Admirals offers 24-hour CFD trading on the DAX40, with zero commission and tight spreads across the world's most popular trading platforms.
When learning how to day trade the DAX40 CFD index, it is important to remember that day trading itself involves taking multiple trades a day. This is important to know as a higher frequency of trades means more winners and more losers. Therefore risk management should be the cornerstone of your trading strategy. For now, we will focus on using some of the indicators and techniques we have used in previous strategies, found above.
The chart above shows a five-minute chart of the DAX40 CFD index during a specific time period. By using a variety of trading indicators, it can help the trader to identify the trend of the market as well as a way to time their trades. For example:
- Rule 1: Go long when the price is above the 50 EMA + the MACD is above the zero line + price has rejected the lower Bollinger Band line.
- Rule 2: Go short when the price is below the 50 EMA + the MACD is below the zero line + price has rejected the upper Bollinger Band line.
The chart below shows some of the occurrences of rule one and two in action:
It is clear to identify the volatility of the price cycles in the beginning half of the chart. The combination of using the exponential moving average and MACD alignment helped to avoid such volatile conditions - on this occasion.
The middle part of the chart is where the price cycles start to settle, and the exponential moving average and MACD alignment help to identify three possible trading opportunities highlighted in red. While the price movement in the first red box moved from the upper Bollinger Band to the lower Bollinger Band (a useful price target when trading short), the second and third red boxes did not and broke through the upper Bollinger Band - most likely resulting in two consecutive losing trades.
At the end of the chart, price cycles start to trend higher bringing the exponential moving average and the MACD in alignment for long positions. Trading on the bounce of the lower Bollinger Band resulted in two possible trading opportunities which went on to reach the upper Bollinger Band (a useful price target when trading long).
Conclusion - Trading Strategies 2023
In this article, we have explored a wide variety of different trading strategies and trading techniques. The best way to put this theory into action is through trading in a risk-free environment so you practice your skills, optimise your strategies and learn to manage your emotions while trading.
To start trading in a risk-free environment today, it only takes a few clicks to open a demo trading account. After inputting your name and email you can begin to enjoy benefits such as:
- The ability to trade on any device (Windows, Mac, Android, iOS, etc) on over 8,000+ instruments, worldwide
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FAQs on Trading Strategies
What is the best strategy in trading?
The most popular type of trading strategies are swing trading strategies for beginners and day trading strategies for more advanced traders. Trading the higher time frame as a beginner helps to learn more about the market which can then be used to help trade lower time frames.
What are the 5 types of trading?
The 5 types of trading include day trading, swing trading, algorithmic trading, positional trading and algorithmic trading.
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This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.