Here are 3 successful day trading strategies which work in all markets
Whether that be forex, stock markets, commodities or bond markets.
1. Trend Trading.
This strategy is definitely the most important & forms the basis of all my analysis. It involves identifying a trend in the market and then buying or selling in the direction of that trend.
Tools that you can use to identify the prevailing trend include:
b. Drawing trend lines.
c. Using different moving averages (short term, medium & longer term).
The key to trend trading is to choose a well-defined trend and to stick with it, as this can help to increase the chances of success. Many of the most successful traders have a trend following strategy.
If you are in a losing trade but have entered in the direction of the trend, there is a good chance the trend will resume sooner rather than later & get you in to a profit.
This strategy is well suited to swing traders, who may run their positions over night, as opposed to day traders or scalpers.
2. Range Trading.
This tends to be a more active trading strategy, with more opportunity for those who have the time to sit on front of a screen, taking advantage of short term volatility.
They will be quick to act, selling short at the resistance area, then may reverse & buy in to a long position at the support.
Scalpers tend to take more trades but with lower risk & tight stops. They take advantage of smaller & more frequent moves than swing traders.
3. Breakout Trading.
This strategy involves a lot of patience! Breakout traders look for price breakouts above key levels of resistance or below key levels of support.
These levels may be identified using tools such as trend lines, Fibonacci retracements or moving averages. (More about this below).
It can be a high-risk but high-reward strategy, as strong breakouts can lead to significant & extended price moves.
Often for days & even weeks. However, it is important to carefully consider the strength of the breakout and to use appropriate risk management techniques to avoid being caught in too many false breakouts.
Unfortunately false breakouts are common so this strategy requires very strict risk management techniques.
Here are three moving average strategies that can be used to make money:
1. Crossover strategy:
This strategy involves using two moving averages, a fast one (eg 10 hour) and a slow one (eg 20 hour).
a. Buy when the fast moving average crosses ABOVE the slow moving average.
b. Sell when the fast moving average crosses BELOW the slow moving average.
This can be a simple but effective strategy for identifying potential changes in trends and potential trade entry points for trades.
2. Trend-following strategy:
This strategy involves using a moving average (or combination of moving averages) to identify the overall trend in the market, and then buying or selling in the direction of that trend as stated above.
For example, if the moving average is trending upwards, a trader might buy on dips & even use the value of the moving average as a support level & entry point for the trade.
If the moving average is trending downwards, the trader might sell on rallies to resistance areas, which again may even be the value of the moving average itself.
3. Moving average breakout strategy.
This strategy involves using a moving average to identify key levels of support and resistance, and then buying or selling when the price breaks above or below those moving average levels.
This can be a high-risk, high-reward strategy (as stated above), as strong breakouts can lead to significant price moves.
However, I must repeat that it is important to carefully consider the strength of the breakout and to use appropriate risk management techniques to avoid being caught in false breakouts.
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