Designer Trading Strategies Revealed

There are many trading strategies that can be used in financial markets including swing, scalping, position, automated trading and discretionary.  If you are a new trader, you may just want to choose a strategy and jump right in but choosing the wrong strategy could put you out of the financial trading market forever.  In the beginning, it is important that you learn what kind of a trader you are and then choose a strategy that fits your style.  For example, do you stalk investments by watching all their moves before investing, or are you a forager who enjoys searching for the perfect trade and time to get involved?  There are important questions that speak directly to your style of trading.

Trade Stalkers

If you are a trade stalker, you are generally methodical and will not get into a trade without learning about all of the economic, psychological and political factors that could affect your trade.  With this style, you will be focusing on predicting trends of assets by analyzing all of the factors that can affect them.  If you are a trend trader, you are likely to be very patient and you understand that significant changes in the market may take months to coalesce.

Trade Foragers

If you are a trade forager, you will be searching for trades that will generate the most profit in the shortest possible time period.  Scalping is a popular trading strategy for this style because it attempts to predict changes over a few days or a few hours.  If you are an individual investor, you can use scalping to execute trades and react more quickly to economic news.  Rapid spikes in oil prices and interest rates as well as political turmoil, natural disasters, war, gold prices and many other conditions can influence subtle changes in the market.  When you can move capital more quickly, you can purchase, make a decent profit and exit the trade before the market has adjusted.  With this style, you will want to get into a trade and make a profit before the market can react.  You can use this style and the scalping strategy to quickly react to short-term changes in the market.

Technical and Fundamental Analysis Traders

If you are a technical analysis trader, you will be focusing on the latest history of the market in order to predict any changes in the future.  This style involves using indicators like political  and economic news to attempt to predict future changes in price.  These indicators generally work well for short-term investments and they can help you determine the best price to execute a trade at.  Technical analysis works by converting price fluctuations into a moving average which illustrates the volatility of the market.  These averages can be very useful for short-term trades as they help to determine target and stop points with more accuracy.  Conversely, if you are a fundamental analysis trader, you will be using the same indicators but you will use a long-term moving average to determine trends over a great period of time.

What trading strategies have you found to be most beneficial? Share your comments with friends and fellow readers here at eToro.