In order to be successful in trading be it stocks, forex, gold or others, traders must have a solid trading strategy, otherwise it will be difficult for traders to have an advantage. Traders use a variety of trading strategies to determine when to buy and sell. Traders are constantly innovating and improving strategies to devise new strategies to try to interpret market movements. In this article, you can find several types of trading strategies.

Most trading strategies use Technical Analysis, but there are also those that use Fundamental Analysis. Here are a variety of trading strategies that are commonly used:

1. TRADING NEWS

Trade using news. Traders can profit by anticipating or trading following the impact of economic events.

2. MACRO TRADING

This type of trading relies heavily on Fundamental Analysis. Traders will look to indicators of economic fundamentals (i.e. macroeconomic data) to try to understand the strength of a currency relative to other currencies.

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3. CARRY TRADE

Carry trade seeks to make a profit by taking advantage of differences in interest rates between countries. Typically, currency bought and held overnight will earn bank interest in the country in which the currency was purchased. Traders can look for the currency of a country with low interest rates to buy the currency of a country that pays high interest rates, thus profiting from the difference.

4. SCALPING

In this trading strategy, the trader opens many trading positions and tries to make a small profit from each trade. Scalping is one of the fastest trading strategies. Scalpers seek to maintain their position for a short period of time, thereby reducing risk.

5. DAY TRADING

Day trading is probably the most famous trading strategy. Day trading, as the name suggests, is a method of buying and selling within the same day. Positions are closed the same day they are taken, and no positions are held overnight.

6. SWING TRADING

Swing trading is a medium term trading strategy. Trading positions are often held for more than a day to a week. Traders will look for trading opportunities at “swing high” or “swing low” over a period of time. This strategy is able to filter out some of the noise in price movements, as seen in day trading. This makes the swing trading strategy an excellent choice for newbie traders who have just started trading.

7. POSITION TRADING

Position trading is a long-term trading strategy. This type of trading can last from a few days to a few weeks and sometimes longer, months or even years. Traders who use this strategy usually rely on Fundamental Analysis along with Technical Analysis. This type of trading may require a higher level of patience.

8. TREND TRADING or TREND FOLLOWING

Trend trading is one of the most popular and common trading strategies. This strategy attempts to identify an uptrend or a downtrend and select trade entry and exit points based on that trend. In Trend Following, traders will hold their trading positions until the trend ends. If you are interested in learning this strategy, it is recommended to read the Trend Following Guide.

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9. TRADING RANGE

Range trading is a popular trading strategy based on the idea that prices can often stay within a predictable range over a period of time. This strategy works well in a sideways market. Traders rely on the ability to frequently buy and sell at predictable highs and lows of resistance and support, which can sometimes be repeated over the course of one or more trading sessions.

10. TRADING MOMENTUM

Momentum trading is a strategy to catch a strong price movement in a certain direction, which is a possible indication that the price will continue in that direction.

11. BREAKOUT / BREAKDOWN TRADING

The Breakout / Breakdown strategy is a method in which a trader will try to identify the entry point at the breakout of a certain price level. If the price breaks higher than the previously defined resistance level, traders can buy with the expectation that the price will continue to move higher. Similarly, if the price breaks the support level downwards, the trader can sell with the aim of closing the position at a lower price.

12. PULLBACK / RETRACEMENT TRADING

Pullback/Retracement trading is based on the idea that price never moves in a perfectly straight line. Usually the price makes some kind of pause in the middle of a bigger trend. Traders will wait for the price to correct, or “retrace,” before resuming the previous trend.

13. REVERSAL TRADING

In reversal trading, the trader tries to anticipate a reversal in the price trend. This strategy is considered more difficult and risky. A true price reversal can be difficult to spot, but traders will benefit greatly if they can predict the correct price reversal.

14. CONTRARIAN TRADING

As the name suggests, Contrarian Trading tends to go against the prevailing market trend. A contrarian trader does the opposite of most other traders and, in fact, bets against the crowd to profit from it. They buy when prices are underperforming, then wait until their performance improves. Or sell when the price is too high and reap profits when there is a correction. Contrarian trading is considered a very high risk trading strategy.

15. PRICE ACTION TRADING

The Price Action strategy relies heavily on the ability to read price data charts, without using Technical Analysis indicators. Sometimes this strategy is called Naked Trading. Price Action users believe that price is considered the main signal of activity in the market. Usually traders use Candlestick patterns or price patterns

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Conclusion

While no strategy is guaranteed to work all the time, traders should choose a trading strategy that fits their needs and personality. You can also combine or use variant or hybrid versions of the strategies described above. Use your preferred trading strategy to create a complete Trading System.