If you consider the financial markets a jungle, then your trading strategy is a detailed plan on how you will navigate and hunt successfully.
In the financial markets, trading strategies outline how you will determine optimal entry and exit points that will allow you to earn maximum profits with as minimal risk as possible.
The huge and diverse forex market has always accommodated varied, flexible trading strategies.
However, when trading specialised financial markets, such as Indices, Bonds, Vanilla Options and ETFs among others, there are two broad strategies often implemented: day trading and swing trading.
Day trading is simply the opening and closing of trades within a day, or multiple times a day. With profits/losses determined daily, day trading is considered to be as lucrative as it is risky, and a preserve of the more experienced investors.
Nonetheless, with proper knowledge and skill, anyone can successfully day trade the financial markets.
Day trading requires a great deal of discipline because of the number of trades one can execute in a short period. Day trading also requires proper knowledge in terms of essential trading principles and scheduled economic news on any particular trading session.
This trading method also requires decent capitalisation as well as the knowledge of the best trading hours for your preferred financial assets.
Investors who wish to day trade must develop solid risk management plans and also sign up with a reputable and reliable broker whose trading platforms favour the high volume of trades that the strategy is based on. Having access to automated trading software also helps.
These types of trading platforms should also feature low spreads, professional charting and reliable orders’ execution.
Swing trading, on the other hand, involves taking advantage of trading opportunities that may last from a few days to a few weeks. The belief is that big money is made from big price swings in the market.
Swing trading is a strategy suited for assets that tend to make big directional movements occasionally.
Swing trading strategies require the patience to hold trades for days on end, without getting concerned with short-term fluctuations.
Many investors employ swing trading strategies because of the time freedom (you do not need to be glued to your charts) as well as the excellent risk/reward balance that they provide.
The most popular swing trading strategies are based on breakouts, wide ranges, trend reversals and trend retracements.
Below you will find a selection of online trading strategies covering various financial instruments, and suitable for day traders and swing traders, so read on!