17 April, 2020 | AtoZ Markets – If you have ever gone to a store and bought something, you unknowingly took part in trading. Trading means nothing more but ‘the exchange of one item for another.’ The seller gave you a product, and you gave him money – you made an exchange. When you look at trading from a business perspective, the principle is the same. The only difference is the products that you don’t trade everyday commodities, but stocks, shares, forex, etc.
Not so long ago, if you wanted to take part in trading, you had to be working for a large institution, brokerage, or a trading house. However, the invention of the internet meant that many industries started to function also online. Nowadays, everyone who has money can take part in trading.
There are so many platforms that choosing the right one to trade on can be challenging. You need to keep in mind that everything depends on what you want to trade – stock, shares, or maybe forex? For each of them, a different platform will be considered as the best option. Before signing up, check the reviews online, as they are the best source of information. Just Google the name of the platform, like this – ‘IC market review.’
Once you have decided on your platform, you can start trading. However, this is not something that you let just happen. Everything needs to be thought-through – you need to have a strategy. If you are new to this, understanding which one will work best can be hard. That’s why we’re here for – here is a list of strategies that will help you in trading.
Without further ado, let’s get into it.
Best Trading Business Strategies
#1 Scalping Trading
Scalping is the shortest trading strategy. Traders who use it, hold positions open for as little as a few seconds when the price changes. They tend to trade only during the busiest time of the day when the trading sessions overlap, and there is more trading volume and volatility.
While profit from one trade might be small, scalp traders perform them several times a day, which in the end gives a substantial sum. Scalping trading strategy is often used by people who practice day trading.
#2 Day Trading
Day trading is probably the most popular active trading strategy. As the name suggests, people who use this strategy buy and sell the securities within the same day. Nothing is held overnight – everything is closed on the same day. Day trading is mostly used on forex and stock markets by well-educated and experienced traders.
Day traders use many intraday strategies, such as:
- Range trading – using support and resistance levels to determine decisions
- News-based trading – looking for a trading opportunity from heightened volatility around news events
- High-frequency trading (HFT) – use of algorithms to benefit from small market inefficiencies
Once you get the hang of it, you can make a real profit with this strategy. However, in the beginning, you need to be very careful not to fall victim to a scam.
#3 Swing Trading
Swing traders want to gain profit from an unexpected price move. However, this strategy exposes traders to overnight and weekend risks, after which the following session can open at a much lower price. Swing traders hold their position for days, sometimes weeks.
While swing traders don’t have to monitor the charts continually throughout the day, they still need to dedicate a few hours to analyze the markets. This is an ideal strategy for those who have other commitments, like a full-time job or university, and want to trade in their free time.
#4 Position Trading
When someone is using position trading, it means that he or she is holding a position in security for an extended period of time – it could be weeks, months, or even years. Position traders are not looking for small changes in prices. Instead, they are waiting for a significant shift to gain the maximum profit.
Since position traders are not looking for minor price fluctuations, they don’t need to monitor their position as often as others. They usually use weekly or monthly price charts, thanks to which they analyze and evaluate the market.
Remember that because position trading is a long-time strategy, there will be times that the market will be against your position. However, you have to leave it be and wait for it to pass – don’t exit the market when something like this happens. The key to position trading strategy is sticking to it.
When you have decided which strategy will be the best for you, you can start trading. You need to remember, however, that mastering it can take some time, which is why the best option is to start with a smaller amount of money. Once you get the hang of it, you can start trading with more money and securities involved. Good Luck!