What is Trading Strategy?
A trading strategy is a set of laid down rules which must be obeyed before a trade is placed or taken. Basically, it is one of the most important things when it comes to trading and every trader definitely needs a trading strategy for a successful trading experience and money management.
Types of Trading Strategies
There are different types of trading strategies, and these strategies are used based on how you like to analyze the market. These strategies include;
This involves a trader looking at the fundamental indicators in the economy and how they affect the price action of a market. This can be very complex, but it is a highly effective trading strategy.
This involves looking at the past action of a market in other to determine its future price action. This is a very effective strategy as most markets have their various behaviours which when studied can make it easier for you to understand to an extent what the market is telling you and what to do at a certain point in time.
This involves identifying formations in a market in other to determine what actions the market is about to take. This is a very effective strategy used by a lot of traders. With this strategy, all you need to do is identify certain market formations, these formations tell you what the market is saying and what you should do when you see such formations in the market.
Other trading strategies include;
- Trend Analysis Strategy
- Triangle Breakout Strategy
- Support and Resistance Strategy
- Flag and Pennant Strategy
Benefits of Using Trading Strategies
- Trading strategies ensures consistency
- It helps with money management
- Prevents traders from gambling rather than trading