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What Is a Trading Strategy and Why Traders Must Use ItI think I won't be far from the truth if I say that novice traders think about trading signals and trading strategies as the main components of their profitable trading in the financial markets. They are wrong, but they will need time and enough knowledge to understand their mistakes. It is obvious that novice traders think that if they know when to buy and when to sell in the market, they will make money. But the reality gives us about 90% failed traders who succeed only in destroying their capital. Trading signals won't make your rich if you know nothing about trading. If we talk about trading signals, we can say that they are useless for the majority of traders. But trading strategies, which produce trading signals, it is another tool which definitely worths your attention. In this post, let's talk about trading strategies. What is a trading strategy? What type of trading strategies can you use? Why do you need to use trading strategies? How to pick the right trading strategies? In simple words, a trading strategy is a list of rules which describe when to open a trade and when to close it. A trading strategy gives you a signal for buying or for selling. It tells you where to place stop and where to place profit targets. Some trading strategies can include information about the risk level and how you can manage open positions. But I would like to talk about it in the context of money management strategies. We can divide trading strategies into different groups using different criteria. Trading strategies can be based on Fundamental analysis, Technical analysis, or they can combine both types. We can divide trading strategies based on the duration of holding open positions, and we will get the following types: - scalping strategies (very fast trades with very close profit targets) - day trading strategies (trades which are opened and closed in the borders of a trading day) - swing trading strategies (when we stay with open positions for more than one day) - long term trading strategies (when we hold positions for weeks and months) - investing strategies ( when we buy a financial asset and hold it for years) We can trade in different market conditions, and for them, we need to use a different approach: - trend-following strategies (when we trade in the direction of the main trend) - countertrend strategies (when we trade against the main trend trying to catch pullbacks) - trend reversal strategies (when we try to catch a trend reversal and join in a new trend in the best point) - strategies for range markets (when a market moves sideways, and we buy from the support and sell from the resistance) - volatility breakout strategies (when we try to catch a strong movement and a beginning of a new trend after a consolidation period). All these strategies are based on different principles and must be used properly in order to avoid false signals. For example, if we use trend-following trading strategies in a range market, we will get tons of false signals. The same goes for using range strategies in markets with solid trends. Trading strategies can be based on simple Technical tools like trend lines, levels, zones, chart patterns, and a wide range of different indicators and their combinations. What is very important to note? There are thousands of different trading strategies, which allow you to trade in any market, timeframe, and in any market conditions. There are a lot of good trading strategies which can be profitable in the long run. But there are no trading strategies which will give you 100% profitable trades. You must understand that any profitable trading includes trades closed by stop orders. Drawdowns are a part of any profitable trading as well. When someone tells you that this trading strategy has 100% win rate, you are talking with a clown but not with a trader, and you shouldn't use such a trading strategy. You should note that in order to succeed in trading, you must have at least one trading strategy. When you jump from one market into another market and you trade without the exact rules, you have very good chances to fail. You aren't consistent in your trading decisions and it leads to unpredictable trading results. Of course, you can expect that you will be so lucky and take part in only profitable trades. But the reality can be far from your expectations. Trading strategies allow a trader to be consistent. You have the trading strategy. You trade again and again, following the same rules. You pass through drawdowns. You pass through profitable periods. You are profitable in the long run because you use the proven trading strategy and realize its potential. What else you should note? A trading strategy must suit you like shoes. You don't wear shoes which don't match your size, right? The same goes for trading strategies! They must match traders' nature, lifestyle, goals. When you use the right trading strategies, you feel comfortable. It is a good way to avoid mistakes in trading. There are no perfect trading strategies if we talk about trading results. But there are trading strategies which perfectly suit you! You have to use such trading strategies! Before using any trading strategy, even if you are sure of its profitability, you should backtest it. You will see all ups and downs of your equity curve. You will see the periods of drawdowns and how the strategy can manage it. You will see the weaknesses and strengths of the trading strategy. Based on the information from backtests, you will be much more confident in this strategy when you start real trading. It will also be good to start using a trading strategy in a demo account first. And I guess you have a question, where you can get a trading strategy? There are two ways. Of course, the simplest way, you can use trading strategies developed by other traders. Google search will help you with this task. Also, ask your favorite traders to share their trading strategies. Pick the most suitable variant for you among thousands of different strategies. Don't forget that you must feel comfortable using the trading strategy. The 2nd way is the best for any trader. It needs more knowledge, experience, and time, but it allows you to get the strategy which 100% suitable for you as a trader and it is oriented on reaching your goals. I'm talking about the way when you create a trading strategy for yourself. Concluding, I want to say that there are a lot of variants of how to make money in the financial markets. There are a lot of trading strategies that work and they are profitable. You just need to pick the most suitable trading strategy for you and use it properly. Don't spend your time trying to find a strategy that will give you only profitable trades. There are no such trading strategies! Also, please note that it is impossible to succeed in trading if you don't use a trading strategy or portfolio of trading strategies. I really advise you to stop searching for useless trading signals and focus on the tool which really can be helpful for you. Trading strategies give you what you need, and they make from you an independent trader. You trade in the markets you want and how you want. You follow your own trading plan, which helps you to reach your own goals in the financial world! I wish you good luck!
KRAKEN:BTCUSDEducation
by DLavrov
18
BTCUSD: Be careful.Bitcoin shows a very choppy, non-trending market situation right now. It could go both ways: Bullish Scenario: Current market could be a wave 4 Elliott Wave correction and it will PUMP soon. Bearish Scenario: A Tenkansen / Kijunsen crossover is observed which is a strong bearish signal according to the Ichimoku technical analysis and the price will drop lower. Suggestion: lower your position size and just wait for a breakout / confirmation in the direction. No need to take risks and lose money, be patient.
by Cryptonerds
2
50MA Trading Strategy - Potential Entry Point for Big DropPlease comment below if you have any feedback and LIKE if you agree with the idea. TYPE OF TRADE: I am looking for a great setup that could form soon for a SHORT position. CONDITIONS TO TRADE: I will be looking for 2 specific conditions to enter into a short position - This 2 year resistance holds and doesn't get broken...even by a wick. - We close below the 50MA Note: I have put 3 possible scenarios that could play out that would satisfy these conditions (don't look into the periods of them too much as I have drawn them roughly) OTHER NOTES: The reason why I am really excited about this potential trade is we are near the 2 year resistance and if we reject off it this could be the big move we have been looking for. FUNDAMENTAL ANALYSIS: - We have had a surge in stocks around the world but what worries me are issues of: -Supply chains being disrupted -Could trigger more bankruptcies -COVID-19 cases rising -This is the original catalyst that has caused the unsteadiness of the markets -COVID-19 uncertainty -Are we re-opening too soon...only time will tell -Unemployment still rising -What are people doing with their incomes? -Housing prices and Banks health -Nothing as of yet but the potential problem if housing drops and banks' security to people's loans becomes a risk for the banks. I will continue to update this trade idea as we progress but please comment as I would like to hear peoples thoughts on my ideas. Note: I have put a link to what my 50MA Trading Strategy is and what drawbacks and risks it has.
FTX:BTCUSDShort
by CarlsonCryptoTrading
BEWARE FIRST & LAST SESSION HOUR- KDD CORPORATION-30MN- MY IDEASAfter a past long ranging period , we can observe that the KDD CORPORATION curve in 30mn has been at first descending. After a short period with flat movement we observed a change in direction, seeing now the market going up back to the former ranging zone. We see that there is a huge amount of fight between buyers and sellers. For the time being, buyers win! Illustrated by two strong buying signals opportunity to get profits in the long direction. Next: -High probability of seeing the market running up more even in this slop angle. - Beware of the first and last hour of session , major moves has been happening during those times. - Possibility of a short entry around the top dotted black line which is a strong resistance point OR if we observe a large candlestick (one unique candlestick ) going down to break all lines and reshape the market.
TSE:9433Short
by Diallo_Charts_Ideas
How to Trade Bull & Bear Pennant Pattern | Pennant Tutorial !Pennant Chart Patterns Tutorial ! Pennant Pattern : Pennant Patterns are continuation chart pattern, forms when price of a security or asset makes strong upward or downward movemnt followed by a consolidation period with converging trendlines which forms a pennant before continuing to move in the same direction. Bullish pennant forms in a bullish trend market and Bearish pennant forms in a bearish trend market. Bullish Pennant : Bullish Pennants are bullish continuation pattern that occurs in strong uptrends and it forms after a sharp climb in price then a consolidation period with converging trendlines. After formation of the pennant, price breaks above the upper trendline of the pennant and continues the bullish trend. Bearish Pennant : Bearish Pennant is the opposite of a bullsish pennant. Bearish pennant forms after a sharp drop in price then a consolidation period with converging trendlines after that price makes a brekout below the lower trendline of the pennant and continues the bearish trend. (* Key things to know : In a pennant pattern the period of consolidation should have low volume and the breakout should occur on higher volume like most pattern. Above average volume confirms the breakout. You can also use other indicators like MACD or RSI to know the strength of the breakout. Look at below detailed examples - ) Please Like & Comment and Stay Tuned ! 👍 Thank You-
BITSTAMP:BTCUSDEducation
by tapasdhanadana
5
How to Trade Bull & Bear Flag Pattern | Flag Pattern Tutorial !Bull & Bear Flag chart patterns Tutorial! Bull Flag : A bull flag forms in bullish trending market, After a strong bullish movement when this pattern forms it signals the market is likely to move more higher. Bull flag pattern much similarly looks like a horizontal parallel channel or downward parallel channel along with a strong bullish vertical rally; when we draw the pattern it looks like flag on a pole, that's why they are called bull flags. How to identify and Trade Bull Flags : - It is easy to identify a bull flag you just need to look for a Bullish Vertical Rally or Trend which is Pole of the Flag then identify the consolidation which will look like either horizontal channel or downward channel which will be the Flag. After identifying the pattern you can enter at the bottom of the flag or you can enter when price breaks the upper trendline of the flag which is more safe. The breakout may also be a fakeout that's why we will take help of Volume and RSI Indicator to confirm the breakout. As shown on the below example you can see when price breaked the uppper trend of the flag the Trend drawn on the RSI was also broke and the Volume was high. () ( *Key things to know : If the retracement measured from the vertical rally or Flag Pole retrace more than 50% the pattern becomes weak and it may not be a Flag Pattern but sometimes it stays valid if it breakouts above the uppertrend of the flag.) Bear Flag : Bear Flag is just the opposite of the Bull Flag Pattern. A bear Flag forms in bearish trending market. Bear Flag pattern signals the market is likely to drop more lower. You need to identify Bear Flag in bearish trend when the price of a financial asset drops then if the price forms a horizontal channel or upward channel which will look like a inverted flag whose flag pole will be upside and the flag will be downside. Stay Tuned; 👍 Like this tutorial & share your comment below and also check other tutorials with example linked below; Thank You-
BITSTAMP:BTCUSDEducation
by tapasdhanadana
9
4H Support / Resistance with RSI Day Trading StrategyRSI = Blue, EMA of RSI = Red. RSI 14, EMA 45 Long Rules: 1) RSI > EMA RSI = look for long setups 2) Resistance is broken ( a new high ) 3) Price rejects (pulls away) from the previous resistance 4) RSI > EMA RSI >> 50 Short Rules: 1) RSI < EMA RSI = look for short setups 2) Support is broken ( a new low) 3) Price rejects (pulls away) from the previous support 4) RSI < EMA RSI << 50 I typically like to place a stop loss at the top of the closest resistance (if going short) and at the bottom of the closest support (if going long) and TP 1:1. Another method is to go for partial profit at the closest support/resistance and move the stop to breakeven to catch longer trades. 3/4 trade setups in the past month on AUDUSD FLAGS: *the setup on the 20th of March was a working short position, but the strategy is looking long. *the setup on the 31st of March was not validated as the RSI is not > EMA of RSI
Education
by tdyk98
Head and Shoulders the accurate price action patternHead and Shoulders Pattern Tutorial - Head & Shoulders chart pattern is a price reversal pattern that helps traders identify when a reversal may be underway; this reversal signals the end of an uptrend. The formation of a H&S pattern resembles a baseline or neckline with three peaks where the middle peak is the highest between the two right and left peaks. Head and Shoulders patterns are statistically the most accurate chart pattern, almost 85% of the time they reach their projected target. The formation of a H&S pattern resembles a baseline with three peaks where the middle peak is the highest. The two left and right peak don't have to be at the same price, but the more closer they are to the same level the more stronger the pattern becomes. The pattern completes when price breaks through the neckline. Stay Tuned, 👍;
TVC:SPXEducation
by tapasdhanadana
Three Percent Trade Idea: Go short WHere is a great opportunity to go short on Wayfair (W). If you are able to go short closer to $90 we think that would be the best time to build your short position. At Three Percent Trades we have a price target of $65.00 / share, which is a potential upside of 22.3% from the current level. We use a combination of fundamentals & technical analysis to trade high probability set-ups, and believe this is a great opportunity to take advantage.
NYSE:WShort
by ThreePercentTrades
Daily Heiken Ashi Auto Trading SystemJust playing around with some ideas this morning and thought I'd try HA candles on multiple timeframes, and trading based on first candle reversal. In other words, buy at close of first green after series of reds (as close to closing price as possible, or lower), and sell on confirmation of first red daily candle. Downside risk exists, but stops will pull you out of the trade, so a hedge is recommended. Can play with multiple timeframes and size appropriately to your risk profile. This produced approximately 550 points in this period of time. 1 ES point = $50 = $27,500 per lot.
CME_MINI:ES1!Long
by axelroark
1
NZDUSD Short For 2.8-to-1 Reward!Hi again @FollowMyForex fans, Our trend following system just gave us a signal to go short on the NZDUSD. After more than a month of no trading, we suddenly get 3 signals in 3 days, it just keeps pouring in! We actually had to weight up the risks and choose between multiple signals. Factors we take into consideration was: * Economic calendar * Day of the week * Risk-reward This trade has a very nice 2.8-to-1 reward ratio. Update to follow, trade safe!
Short
by FollowMyForex