Every online trader follows a trading strategy or a mix of strategies that are helpful when they are making new decisions for their portfolios. At the same time, it’s important to have a clear understanding of the trading market and specific factors which will have an impact on the value of certain assets, and you should, of course, have a proper budget and financial plan. That being said, no one can underestimate the power of a good trading strategy. So, without further ado, let’s take a look at some trading strategies which can be beneficial for beginners.
Position Trading
Position trading is best if you have long-term goals and you are well-versed in fundamental analysis. With position trading, investors stay in the same position for a longer period of time for assets that they think will appreciate in value in the long run. As a result, they will hold a certain position for a long period of time, probably years or months, and won’t make any changes based on the current price or bullish, bearish market cycles.
In order to make their decision, they will complete a fundamental analysis; they will research the company, read the financial statements and also compare other factors such as market trends and look into the historical data of the company.
That said, it doesn’t mean that they will hold on to that position forever. It means that they believe, based on the information they had so far, that the price will rise in value in the future. So, if you’re looking for a long-term investment strategy, it’s beneficial to look into position trading.
Scalping Trading
In simple terms, the goal of scalping is to profit off of incremental price changes and to earn ROI off reselling. In order to yield great returns with this trading strategy, you need to place a large volume of orders, and some traders place over 100 trades in one day in order to make a profit.
The ROI isn’t huge, and with that, the risk is lower compared to other trading strategies. You will need to be patient as you are accumulating profits over a longer period of time steadily. Scalping trading is typically associated with day traders and with the forex trading market. So be aware that it’s tedious, it requires a good amount of knowledge, and it takes time. If you’re interested to start scalping trading, here you will find the best forex broker for scalping along with detailed reviews of the platforms.
Swing Trading
Swing trading is quite popular because it combines both sides of the trading market. More specifically, swing traders tend to buy an asset when they think that the market will enter a bull market phase which will result in a price rise. In contrast, they would sell an asset if they suspect that the value of that asset will drop or that the market will enter a bear market phase.
The main goal is to take advantage of the natural oscillation in the market, and you should be able to analyse the market successfully in order to make the right decisions. This is really a technical approach that requires you to predict the length of each swing. The relationship between the market supply and demand is equally important for swing trading.
News Trading Strategy
With the news trading strategy, you are making decisions based on the latest developments in the market and the current news. It would require you to have a good understanding of the market and to have some skills as an investor because the news obviously can vary on different mediums. Also, in order to stay-on- top of the latest news, you can use different news feeds and apps on your mobile phone.
What’s more thanks to digital media, news travels fast, and it can have a huge impact on the market quickly. So, it is necessary to assess the situation and make decisions for your portfolio. One important question to ask yourself is whether the current news match the market expectations.
In our opinion, it’s also helpful to combine this trading strategy with other trading strategies, as there are always new developments in the market which can be important for your portfolio, however, they should always be considered as part of the bigger picture.
How to Select a Trading Strategy
There are many new trading strategies out there, and the main point that you have to keep in mind is that based on the new developments in the market and the opportunities presented to you, you can change your mind and change your position. You don’t have to stick with one trading strategy, but you can choose different trading strategies based on the assets you have in your portfolio or the personal goals that you want to accomplish. That said, there isn’t a trading strategy which is perfect for every asset or every investor.
The success largely depends on your financial goals, budget, and your appetite for risk. It’s also worth mentioning that trading strategies won’t replace your trading experience or knowledge.
