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TRADING PHILOSOPHY AND TOP TRADING STRATEGIES
This is an extremely important section and lays the foundation needed to be a successful trader. There is no set legal framework for this and the more important thing is the set of beliefs and principles followed by the trader. This consists of several areas such as risk management, trading strategies, trading expectation, risk tolerance, and individual capital status. Trading decision-making is a combination of all these. It is best to study these topics further and prepare a theory that suits your needs. The following are the top trading strategies and by combining these with other technical analyses and putting them in the decision-making process, more successful results can be achieved.
The trend-following strategy is to buy when the price of an asset is in an upward trend and short when the price of an asset is in a downward trend. In trading, a trend is when the price moves in a specific direction. In this strategy, traders enter a long position when the price goes up and enter a short selling position when it goes down. This trading strategy is widely used in all markets such as forex, crypto, and stocks.
The day trading strategy involves buying and selling financial instruments to close the position at the end of the day to profit from small fluctuations in price. Day traders focus on factors like liquidity, volumes, and volatility before opening a position. Day traders base their decision-making on tools like candle stick chart patterns, trend lines, and volume bars. To be successful in day trading, a special thing they must have is to control their emotions and carry out the trading process.
Scalping is a trading strategy that focuses on profiting from small price changes and making quick profits by reselling. During scalping, stocks with high volume are selected by tracers. The most important thing is that in scalping you must have a correct exit strategy. The reason is that you can lose the value of all the small profits you have made with one loss. A scalping trader makes hundreds of trades per day, and you can succeed in scalping by making the percentage of profit higher than the percentage of loss.
Fibonacci retracement trading strategy
Identifies the main support and resistance levels and the importance of these increases to make future decisions to trade after the market price reaches the main support or resistance level. The Fibonacci trading strategy uses the “golden ratio” to determine trades entry and exit points in all time frames (1 hr, 2hr, 4hr, 1D). By following a trading strategy like this Fibonacci retracement, you can control your emotions and engage in trading activities. For example, if you use FR of 1hr duration, you can get more successful results from trading without getting caught by emotions by getting confirmation from higher timeframes (4hr, 1D) and entering trades.
This strategy looks for levels or areas beyond which a security has been unable to break, and waits for it to break beyond those levels. (since it can move in that direction). When a price moves beyond one of these levels, it is called a breakout. Traders use the technical analysis method to identify these breakouts. A breakout trader usually looks for price patterns, for example, where the price of a security has been resistant to moving above or below a specific price level or price area. Then, the breakout trader attempts to profit by entering a trade in the direction of the breakout, assuming that the price will continue to move in that direction.
This means that trades are made for both movements in any financial market. They buy when the market is going to go up and short when it is going to go down. They study technical analysis and do trading in over-bought and oversold situations. When there is a strong trend, swing traders work to enter the direction of trade by retracement swings. Especially since they do both long & short, they can get more trading opportunities.
Position trading is a popular trading strategy where a trader holds a position for an extended period, usually months or years, ignoring small price fluctuations in favor of profiting from long-term trends. Position traders tend to use fundamental analysis to evaluate possible price trends in the market, but other factors such as market trends and historical patterns are also taken into account through technical analysis.
Over-bought and over-sold strategy
Often used in forex and the stock market, it identifies overbought & oversold situations at support and resistance levels through RSI (relative strength index). This belongs to a family of trading tools known as oscillators – so-called because they oscillate when the market moves. When the RSI value is above 70%, the market is considered overbought. This means that traders are speculating that the market may return to a downtrend. Also, when the RSI reaches a level below 30, it is speculated that the market may enter an up movement again.
Trades are done here based on market news and market expectation. It is essential to have a skilled mindset to gain an advantage from trading before and after news expires, and this can be introduced as a combination of having access facilities to quickly access news and making relevant decisions quickly. The expectation and reactions of the financial market participants are more taken into account than the news.
This is where trades are entered at the time the market is scheduled to close. Here, this trades division refers to trading with the understanding that the price will settle at the end of the day. An important thing that happens here is that more attention is paid to the closing price and the price movement of the previous day. They can speculate on the price. Also, they can get more benefits by placing stop loss and taking profit opportunities following a proper risk management and entering trades.
