A trader needs trading strategies that work if he is to be successful in this business. Yeah, but which are the best trading strategies?
Here we offer you a complete guide to the best trading strategies for beginners. This article will help you understand how they work, how to make the most of them, as well as the best brokers to use. Having trading strategies that work already means starting on the right foot.
What are trading strategies?
The trading strategies are the modus operandi of a trader. Hence, his way of operating on the financial markets to get the best profit.
Of course, you are definitely looking for the best trading strategies ever. But, we're sorry to disappoint you in telling you it doesn't exist. Because each trader is a separate case. In other words, traders operate according to their own personal character, move according to their economic and financial possibilities, and make decisions based on the asset they prefer.
In fact, an anxious person is not the same as a swagger. A meticulous and thoughtful person is not the same as one who acts on instinct. A person who likes cryptocurrencies and stocks is not the same as one who prefers stock indices or ETFs.
Then there are those who prefer to operate day by day, even by opening and closing more daily operations. On the other hand, there are those who prefer to buy an asset and then resell it weeks, months, or even years later. Hoping to scrape together a nice profit.
Why use trading strategies that work?
When trading online it does not matter what type of financial instruments you are trading because mainly there are two ways to obtain constant profits, that is to create a trading strategies list and to rely on it for an excellent money management system.
The best trading strategies list is important, so it's good that they are properly tested and successful. They are essential to survive the intense competition from the financial markets. If you decide to adopt a trading style based on an untried and proven trading system, you are doomed to fail.
Therefore systematic trading is the right way to go.
It is important that the trading strategies for beginners are adapted to work well for trading different types of assets.
Following the best trading strategies gives you the opportunity to stay focused on the many news and economic data that can hinder the analysis process.
Using a planned trading strategy by following our forex trading beginners guide and free trading guides that relies solely on price action allows the trader to profit by ignoring constantly incoming news. In this way, the trader is able to improve his performance.
On the other hand, trading without a specific trading plan does not give the possibility to evaluate one's performance, having no basis with which to make a comparison.
Furthermore, when the trader uses a trading system for a long period of time he is able to create a statistical database that will help him to evaluate his own performance. Once your assessment is complete, you can start working on making some changes if you see fit.
So by changing certain principles and comparing the new results with historical data, you are able to see if the update was successful or not.
Best Trading Strategies List
Let's now see which are considered the best trading strategies list. Each has its own advantages and disadvantages which are set out below.
Day trading is considered to be a strategy that plans to operate on the markets within the same single day. Then, a trade is opened and closed within the same day, with no positions held overnight or held open on the weekend.
The trader, therefore, prefers to make his profit or suffer the loss without having to wait for the next day or other days. In this way, he is aware of the effectiveness of his strategy without having to wait any longer.
It is especially ideal for those traders who prefer to act calmly, thoughtfully but still maintain the right speed to act within 24 hours.
- Advantages: costs are reduced since only one transaction opens and closes within a day. The analysis focuses on a single operation.
- Disadvantages: if the open trade goes wrong, there are no other trades to offset the loss and the day is lost.
The scalping is considered an intraday trader that opens and closes many operations a day. Therefore, his profits will be reduced and it will be the sum to give a more precise calculation on his work.
In this case, the scalper - as the trader who prefers this strategy is called - must be very quick to think and execute. Precisely because it opens and closes many operations within a few hours.
You need an attitude to stress and quick thinking in analyzing the charts but also in understanding what are those events that are coming and that can affect the price of the assets.
The trader seeks to limit operational risks and protect trading capital.
- Advantages: Losses can be offset by opening and closing many positions.
- Disadvantages: you need to be very fast, to the point of compulsiveness. The profit achieved acquires a certain consistency only after many operations being of the modest entity.
It is considered a cross between day trading and the “buy and holder” strategy that we will see later.
Swing Trading is a technique that is very suitable especially for those who are beginners with online trading. Furthermore, it can be found suitable for both those who love the thrill of more risk-oriented trading and those who prefer slower rhythms and more thoughtful trading.
Swing Trading is especially suitable for the Forex market. Since we find the right level of volatility and fluctuations suitable for those who intend to exploit the instability of the markets to earn the most.
The positions are open and close in most cases within a few days. It all lies (so to speak) in carefully analyzing price charts and other data in order to identify movements in the value of an asset.
In this way, traders aim to determine when a price is likely to move next, before entering the position, in order to capture any potential profit from the respective position.
For those who want to pursue swing trading, it becomes important to understand what the market sentiment of the currency exchange is and follow the swing.
- Advantages: it allows a weighted choice on the position to be taken while not having to wait long to achieve a result.
- Disadvantages: you need to know the technical analysis very well.
Buy and Hold
Buy and Hold is instead the drawer strategy. So-called because, once an asset has been purchased, it is virtually placed in the drawer waiting for the price to rise.
The time lag between buying and selling an asset can range from days to months or even years. And generally, it mainly concerns raw materials, above all gold, which is an asset that over time changes its price a lot in one way or another. In inverse proportion to the performance of the stock market.
Lately, however, cryptocurrencies are also lending themselves to the drawer strategy. Especially those that have an excellent basic project and at a present cost a few cents of dollars. It is trusted that their price will increase over the years.
Although it is considered a form of passive trading, in reality, the trader holder prefers this form of investment to protect himself and not lose capital. It is suitable for more calm and thoughtful characters, who do not like to attack the market in an almost spasmodic way.
It is necessary to know how to analyze long-term graphs, with weekly, monthly or annual time horizons as appropriate.
- Advantages: you have plenty of time to set up the best trade to open. It is more convenient for tax purposes.
- Disadvantages: it takes a long time to get the final result. It could easily be fallacious since the time frame that elapses is such that many things can change.
Trading signals strategy
Wondering which are the best trading strategies for beginners? This type of strategy is best suited for all those novice traders, who are offered this service free of charge by brokers simply by signing up for the trading signals service and therefore base their strategies on the signals sent.
This is the simplest type of trading that requires no experience or medium to high training.
However, experience leads to perfection and I don't want to bore you by defining specifically the different development possibilities.
Still I only mention that there are many other possibilities on how to go and use the trading signals. Each signal service also has its own system of statistical use and profitability.
There are currently several providers on the market to bet on and choose from, where you just need to follow the signal service instructions and you don't need to know anything about trading to be able to make a profit.
Best platforms to apply trading strategies for beginners
In order to apply the best trading strategies, it is necessary to have all the suitable tools available to do so, first of all an account on the best trading platform. In fact, it is essential to be able to perform a good analysis of the stock, to be able to compare one's opinions with those of other users or, alternatively, to consult certain and reliable data on the latest market news. The effectiveness of trading strategies that work, you must know, is directly proportional to the timing with which the market signals are recognized and applied. In general, time is a crucial element for any financial investment.
This is why you will need not only brokers who provide you with all the useful tools for free, but which allow you to carry out investment operations on the stock exchange that are quickly carried out on the market. Thus, it is crucial to choose a good broker, this could be done by selecting one from our list of trusted brokers review. You can also open free trading demo accounts from the forex brokers listed on our website.
A pronounced slip between your command and the actual execution of the order can actually cause the investment to fail. If market conditions change in the meantime, you will find yourself in the unfortunate condition of having made a great trading forecast but a bad investment.
This is why below we will list the best brokers to invest with using the best trading strategies: once you have chosen the one that best suits your needs, you can proceed with the application of those that we will describe in the next paragraphs.
eToro is a world-class broker. The platform is used by over 30+ million investors around the world and boasts a huge assortment of stocks. The number of users who invest on eToro is a huge advantage for all beginners by virtue of two special tools made available by the broker: Social Trading and Copy Trading. Both tools are available for free once you have registered: click here to open an account on eToro.
FP Markets is a broker that stands out for the many trading platforms it makes available to its clients. By opening a free account on FP Markets, in fact, you can choose whether to rely on:
- MetaTrader4 or MetaTrader5, two of the most popular and used platforms in the world;
- IRESS, a new generation platform characterized by ultra-fast order execution speed and an innovative interface dedicated to each financial sector.
FP Markets also gives you free access to Autochartist services, an automatic recognition service for chart models that allows you to obtain valid information on the characteristics of the securities.
The XTB broker is a very versatile platform within everyone's reach. This broker boasts of being one of the best in Europe, also authorized and reliable, the authorizations that XTB holds are: FCA, CySEC, KNF, these are the most important protection bodies.
The XTB platform boasts of having an eye for its users, this broker has a wide range of courses aimed at traders, a real Academy, which supports inexperienced users up to the most ferocious in the field of trading.
The XTB broker has two types of accounts, the Standard account and the Pro account, in both cases the registration is free. Once registered with XTB, you can access two different platforms.
If instead, you want to give it a try you can sign up via the demo account, a totally free account, in this way you can fine-tune your online trading strategies, but remember that the XTB demo account is limited and lasts 30 days, the installation of the demo account is very simple, it only takes a few minutes.
Best trading strategies - conclusions
Every trader needs the best trading strategies list to move the markets in a winning way.
The main ones are day trading, which involves opening and closing one or at most three positions in a day. The buy and hold strategy, which involves opening a position and holding it for a long period. The scalping strategy, which involves opening and closing many positions within a day. Swing trading, to take advantage of price fluctuations by studying the charts.
Money management is also very important, in order to offset losses by investing on several fronts.
Finally, one should always and in any case try to develop one's own trading style, following the rules of another not always only and only by copy and paste, but sometimes also try to understand, as if there is a great possibility that that system copied works, it may not always be good for another trader.
The key to success is always understanding and implementing your own experience while developing the knowledge you already have.
So do not go to look for the best strategy of trading, but instead choose the strategy that best suits your way of doing online trading.