Tips to Choose the best finance and trading strategy

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We do not copy a strategy, we build it. Developing an independent finance and trading strategy consists of defining a course of action, to be followed in all your trades. It must be consistent with their investor profile, personality, and preferences.

Beginner, intermediate or advanced, whether you are swing trading, scalping or, you need to define your method to become a true and successful trader. Discover the best online finance and trading strategies.

Day Trading

The Day Trading investment method is popular with Forex traders since it does not require advanced knowledge or expertise.

Its principle? Carry out a large number of small trades in the same day, and close all positions before the end of the session. This investment strategy is therefore profitable thanks to the accumulation of large quantities of small gains.

For an effective day trading strategy, it is essential to use significant leverage effects: it is necessary to know how to cut its losses at the right time so that the total of the gains exceeds that of the losses. Thus, you have to take your profits by less than 2 or 3% of the maximum gain and especially cut your losses before reaching 10%.

The Carry Trade

This method is reserved for a more experienced, informed public because it is a little more complex. It consists of using the difference in the interest rates of currencies between them to carry out a profitable operation, without taking into account the evolutions of the market.

And in practice? You have to buy a currency with a low-interest rate and then sell it for a currency with a higher interest rate. Therefore it is important to recognize currencies with high and low-interest rates before starting. The spread practiced by the broker should also be monitored so that it does not swallow up all the gains.

Hedging

This trading technique consists of partially or fully hedging the risk of price variations on a product. With a 100% hedged position, the risk is zero but it is impossible to generate gains. Hedging is practiced on all types of markets (Stock Exchange, Forex, commodities) as well as on different types of products.

The goal? If the future trends are in doubt, do not expose your resources to market risk. This method will also allow you to take advantage of moves in the opposite direction of your initial trade.

Swing Trading

Another investment method, ideal for beginner traders, Swing Trading does not require specific knowledge or in-depth analysis. Their theory is rather simple: speculating on patterns alone.

This requires having identified, upstream, the most marked, and reliable trends on the market. Then, it implies taking a position in the direction of this trend, and this as quickly as possible. The positions should be closed when the trend begins to weaken.

For effective swing trading, watch for support and resistance on asset prices.

Pyramid

It is a strategy that consists of maximizing your gains, by strengthening your position, as long as the market proves you are right. A stop-process preserves benefits as the process progresses.

It is then a question of opening an additional position with each break of the last high/low. We move after the protective stop of all open positions, below the last lowest (in an uptrend), or above the last highest (in a downtrend).

Forex Scalping

Very close to Day Trading, the Forex Scalping strategy is based on the same general operation: to carry out very short operations, in the direction of the trend, taking numerous but extremely small gains.

Here, the amount of investment must be sufficient to ensure its earnings. And here too, you have to use a significant leverage effect, and therefore act prudently, in particular by cutting your earnings at the right time.

Countertrend trading

As the name suggests, this finance and trading refers to taking positions opposite to the trend of an asset. Most often, it is a question of capturing movements of corrections, a retracement of the movement of the trend. More rarely, we can take advantage of a reversal of the pattern, and then catch more of the wave.

Keep in mind: for this type of trading, it is essential to have a strategy that is in line with your psychology.

One trade per day per product

This is a method that makes a lot of sense and which is based on the fact that you only make one trade per day per product. This approach is ideal for those traders who do Swing Trading or Day Trading, not those who do Scalping.

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Finance