5 Profitable Trading Strategies that Everyone Must Know

Everyone has some goals to achieve in their life, so do you, right? You must have formulated some strategies as well to achieve those goals. Well, similar is the case with stock trading. If you wish to succeed, you have to develop a strategy to go by.

Profitable Trading Strategies

In financial markets, indeed, you will find abundant popular strategies that are ready to assist you in every manner. However, not every strategy will make you hit the jackpot. In fact, if one strategy is working well for someone it doesn’t mean it will work the same for you. Ultimately, it’s your decision which strategy you want to follow –  keeping your objective in mind. Below we have some profitable trading strategies that will boost your investment and strengthen your market position.

Quick summary

  • New Trading – best for volatile markets
  • End of Day trading – suits best to risk-takers
  • Intraday trading – best suits to risk-averse people
  • Swing trading – best to gain short term small gains
  • Trend trading – safest trading method

1. News based trading

It is a trading strategy in which you make decisions based on news. If you are a beginner, you better let go of this one as it requires an expert mind with years of experience. To follow this strategy, the trader should have fast access to news to make quick decisions.

Tips for News Trading

  • Deal with each market news separately.
  • Develop strategies beforehand based on upcoming news predictions.
  • Pay more attention to market reactions and expectations, as they can flip your game.
PROS CONS
●       This strategy gives the traders a well-defined entry and exit based on market perception of the news released.

●       Due to continuous news release and rotation, it provides traders with numerous opportunities to make valuable investments.

●       High risk – there’s an overnight risk associated with this strategy.

●       It is mainly for expert traders who understand and predict the possible market reactions.

2. End of day – Trading strategy

Just like it sounds, this strategy starts formulation when the New York stock market closes for the day. The traders wait until the market stabilizes and then take action accordingly.

If you plan to go for this strategy, consider learning the Price Action model to make decisions based on the previous day’s stock trading. Once the market closes, the traders hypothesize the following day’s prices and formulate their strategy using a risk management system like when to do a stop-loss order or limit an order to minimize the overnight risks.

This type of trading strategy does not consume a lot of your precious time. Theirs is only a chart that you need to go through at the beginning and end of the day.

PROS CONS
●       This strategy could be a kick start for beginner-level traders as you don’t have to take up multiple positions at a time.

●       Since you have to make your final call either on the same night or the following day – you will save a lot of time building strategies.

●       You will be at the edge of your seat throughout that time to take the final action before the market opens again.

●       It has a big risk associated with it, though. You can minimize it via a stop-loss order.

3. Swing Trading

Swing trading strategy is based on making small gains on investments over short periods. Since the stock market swings back and forth, swing traders exploit the situation. When the traders suspect a rise in stock prices, they immediately sell their stocks, and they buy when the prices fall. There is no rocket science behind this approach. It is pretty technical and straightforward. Expert traders carefully analyze each swing along with its intensity and duration. They plan their next move based on the previous swing.

PROS CONS
●       It is a viable and straightforward trading strategy that requires learning and practice initially – the rest you will learn with time.

●       It offers a variety of trading opportunities. Traders have several options of investment and can prevent losses through market analysis.

●       Like other trading strategies, the overnight risk is associated with this trading strategy as well.

●       To learn this approach, a lot of learning is required in the beginning.

4. Intraday Trading Strategy

If you want to pursue stock trading as a full-time profession, a day trading strategy would be your best bet. With this strategy, you trade within the opening hours of the market and can hold multiple stocks at a time. However, it is suitable to hold stocks overnight to mitigate the risk of market fluctuations. Intraday traders work in an organized manner so they can instantly adapt to the market changes.

PROS CONS
●       Traders don’t face any overnight risk with this trading strategy.

●       It involves short-term stocks trading that does not last for more than one to four hours. Hence, it reduces the chances of risks.

●       It is a flexible trading strategy as you can simultaneously enter multiple positions at a time and successfully close them on the day’s end.

●       Intraday traders can reap the benefits from both local and international markets.

●       It requires a well-formulated strategy that includes safe entry and exit.

●       Typically, intraday traders have to deal with flat Trading that happens mainly during the day.

5. Trend Trading

Trend stock trading strategy is entirely based on historical events in the stock market. It requires a lot of analysis of previous events and stock price movements to predict future trends. Since the stock market trends change over time, the traders need to be on an alert to adapt to the changing trend without facing extensive losses. To learn the trends, traders take help from tools like equities, currencies, and other securities. In this type of Trading, patience and consistency is the key to expert trading.

PROS CONS
●       It saves traders time as you just have to do initial research to develop a system for trend identification.

●       Traders have the opportunity to exploit the prevailing trend.

●       This kind of stock trading could become a target of overnight market volatility.

 

Every trading strategy has its positives and negatives. Each of them works differently under different circumstances. Profitable trading strategies are the ones that are aligned with your goals and objectives. Therefore, we recommend you choose a trading strategy that suits your personality, working style, and risk tolerance.

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