Trading Strategy

By Andrew On Oct 15, 2020

Are you looking for a good way to make profits on internet? If so, a good Trading Strategy could help you. Trading means undertaking a serious and professional activity which, if done in the right way, can give enormous satisfaction.

On the internet we book holidays, order lunches and dinners and shop, but only a few people perceive the enormous potential of the web also from the point of view of financial income. What we ask ourselves is why not exploit it?

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Why Online Trading?

A bunch of new professions have been born and grown on the net lately. From the social media manager to the web marketer, the possibilities are endless, but in terms of earnings and ease of entry into the sector there is no comparison: online trading represents the maximum that can be aspired to on the internet.

Thanks to the trading activity, many people around the world have achieved a main life goal: to achieve economic independence and build an independent profession with their own schedules, their own times and their own personalized trading strategies.

However, better make a promise. If you are seriously thinking of becoming a financial operator (commonly called a trader) then you need to get into the right mindset right now. This choice could lead you towards professional and profit horizons that you never thought you could reach and yet they can certainly become reality.

The key to all this, the secret known by all professionals to get to the finish line is only one: trading strategy. Get ready to follow us in this guide completely dedicated to strategic trading in all its facets.

This is without a shadow of a doubt the most in-depth guide you can find online and is offered by OnlineTradingCourse.net, the first site in Europe dedicated only to sharing strategies and much more to achieve success with online trading.

If you are in a hurry …

Before starting, we point out that it is possible to copy, in a completely automatic way, what the best traders in the world do thanks to the eToro platform. In practice, thanks to eToro’s patented software it is possible to select the best traders, those who have obtained the maximum profit in the past. These traders can be selected for copying: eToro’s patented software will replicate all their trades in real time.

The advantage for novice traders is twofold: they can get excellent results immediately (the same as the best traders in the world) and at the same time they can learn the best trading strategies by observing live what these great traders do.

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To learn more, you can read our eToro review.

Trading Strategy: the way to make money

Anyone who thinks they can achieve results effortlessly by trading has already made a mistake. If you think you belong to this category of people then you can also leave this page right away and look for other ways to earn that are not online trading.

When it comes to trading we must keep in mind the great advantage that this sector offers. Here, money is used to make more money, this is the approach that great entrepreneurs use to build their world-class economic empires.

Since we are not here to tell tales we want to clarify another aspect that characterizes trading. Although you can make a lot of money with this discipline, we must not forget that here you also face risks and it is primarily financial risks. Basically, in trading you risk losing your investment capital. But how can this not happen?

Since markets can be considered the realm of unpredictability and instability, this is where the risks arise. Fortunately, in these more than 100 years of stock and market history, financial operators have been well armed to face the unpredictability factor and their knowledge is now condensed into the best trading strategies in existence.

Especially in the last 40 years, the discipline of trading has been very thorough and important volumes have been written on the subject. The laws of the markets have been fully understood and now this knowledge has been made available to everyone: we can guarantee you that it is a priceless treasure that contains the sweat of experiments and studies that lasted almost 50 years.

In essence, traders have figured out how to extrapolate data from the historical market prices of assets and securities, but not only. It has also begun to understand how to exploit the external factors that influence the performance of an asset on the markets.

Thanks to the knowledge deriving from market analysis it has become possible to invest under the guidance of statistics and numbers capable of guiding operators towards profit with greater ease.

In particular, two very important disciplines were born. Let us introduce them briefly:

Technical Analysis: experts call the study that aims to predict the future trends of the various financial markets “technical analysis”. Technical analysis is therefore a method of forecasting price trends and if you know a little about trading you know how important this thing can be. Knowing the trends in advance means for you to be able to make profits more often and more easily, of course this does not happen automatically: technical analysis does not allow you to predict the future.
Fundamental Analysis: fundamental analysis in the Forex and stock market is also called “macroeconomic analysis”. Professionals in the sector use this type of study to be able to predict over medium and long-distance time spans what could be the variations in the prices of goods and securities listed on international markets. Fundamental analysis is always carried out by professional analysts who are able to describe economic events and imagine the repercussions they have and will have on the Forex market. To trade online, however, it is necessary to learn how to do it yourself, it is not very difficult.

These two types of analysis are always the basis of any trading strategy (such as intraday trading) and are therefore the principles that guide traders towards their financial successes.

Trading Strategies: are they difficult to use?

If you are a beginner this is most likely the first question you ask yourself: “Are trading strategies within my reach?”. The truth is that a trading strategy is nothing more than a set of operational steps to follow to reach a goal. So to put them into practice you don’t need to be Einstein, just follow the pattern and 90% of the work is done.

All the principles that we pass on here are those used by leading industry experts who have developed these negotiation techniques over the years. So it is not a question of inventing anything new, but only – in a certain sense – of “copying” the ready-made strategies devised by other professional investors.

Thanks to trading strategy, a trader does not need to know all the market laws, all the existing technical indicators or all the factors that influence the course of a market asset. You don’t need to have a degree in economics, much less read many books on trading (maybe some do). The important thing is to follow the pre-established strategy in detail, without ever going out of its patterns.

Trading Strategy: the advantages

There is a very famous saying that perfectly embodies the philosophy behind trading strategies. The saying is the following: “all roads lead to Rome”, it is an extremely well-known and equally fitting phrase in this circumstance, because to paraphrase it it is possible to say that “all strategies lead to profit”.

The strategies that can be adopted are countless and all can be adapted to your trading style. Traders are really spoiled for choice, so great is the number of techniques invented to get the better of the unpredictability of the financial markets. The mastery achieved by some professionals like Warren Buffett testifies to how having an amazing success thanks to strategies is really possible.

Here is a list with the main advantages enjoyed by those who use strategies:

Protection from losses: a good trading strategy not only helps to increase profits, but also to saves a lot of time and money. Many traders in the initial stages of their path do not have much capital available to invest, indeed very often we talk about a few hundred euros. So it is essential to try not to lose money and aim for the constant growth of the total capital. The strategic approach is what allows you to optimize and rationalize your business as much as possible, avoiding unnecessary loss of money in most cases.
Operational signals: using a trading strategy you have the advantage of being able to exclude as much as possible the false market entry signals that many beginners suffer from. You can trade intelligently and accurately by taking advantage of only those decisive signals that can lead you to pocket profits. In fact, the most suitable metaphor for the trader’s profession is that of the hunter. He scans the markets to find only the best investment opportunities. Those are the only occasions in which you have to think about joining the fray, for most of the time the real professionals remain inactive waiting for certain conditions indicated by the strategies to occur.
Increase in profits: there is no other concrete way to make money on Forex and other financial markets than by using strategies. Those who do not use strategies will inevitably see their capital suffer losses constantly up to the total loss of the funds present on the trading account. The subtle difference between a winning trader and a losing one is that the latter are very often lazy people who think that trading is a game and not a professional activity. The former, on the other hand, have invested in themselves in order to equip themselves with valid methods and tools to get the better of the risk of loss, reaching the point of maximizing profits.
Statistical advantage: the statistical aspect of negotiation strategies should also not be underestimated. Although markets, as we have stated, are the realm of unpredictability, those who use strategies can really be able to understand what is happening and exploit all available data to make sensible decisions. Unfortunately, as you can imagine, this does not lead to profit in 100% of the cases. However, the best trading strategies such as those you can find on OnlineTradingCourse.net can guarantee a statistical advantage. This means that in the long term the trading signals issued by the technique used lead to success in 70/80% of cases.

Trading Strategy: short, middle and long term

Although there are a myriad of possible strategies, it is possible to divide them all into the two main groups: those of the short / medium term and those of the long term. Both the one and the other approach require specific measures and attention to be put in place. The choice between the two investment currents depends only on you and your trading style.

We now present the two different approaches to online trading.

Short and Middle term

Trading in the short or medium term means operating on markets with narrow time horizons. This entails the possibility that a trade (a market execution) can last from a few seconds to a few weeks.

Most professionals focus their medium- and short-term strategies on the equity or commodities markets. Here the duration between market entry and exit can also be very short. However, there is no shortage of traders who use this approach in the Forex market.

The purpose of trading in the short / medium term is to make as much money as possible in the shortest possible time. The problem may be that this mode of operation is riskier than long-term investments. Also in this case the solution to the problem is the right strategies.

When choosing this operating mode, you need to know in advance the potential profit to aim for, but also the risks. This helps to implement a successful strategy because it means being more protected from unpredictable market movements.

In order to be successful in medium and short-term trading, you need to have a certain amount of knowledge and use some more recommended technical trading indicators.

Here are some tips on tricks and tools to use:

Evaluate the operation: the first thing to do is to understand the advantages of embarking on a certain operation. It is necessary to recognize the trades to be made and those to be avoided. Sometimes it’s best not to enter the market if you don’t recognize that the odds are all in your favor. Better to postpone an execution to a more profitable moment instead of being stubborn and wanting to trade at all costs.
Using the moving average: an excellent trading tool, the moving average is useful for reading the price trend of an asset in the medium and short term. The moving average is not difficult to use: it is the average price of an asset during a specific time period which can be 15, 20, 30, 50, 100 or 200 days depending on your investment strategy, in this period of time it is possible to understand if the asset is moving along an upward or downward trend.
Market patterns: on the financial markets, prices always follow precise market patterns. This phenomenon is known as market cyclicality and represents a great benefit for traders. Thanks to the patterns, the markets become easier to read and it is possible to know in advance whether the next trend will be bullish or bearish.
Follow the trend: this is the best advice that can be given especially to a beginner. In online trading, following market trends is the key to achieving safer profits by running less operational risks. To be able to identify trends, professionals use many tools, but the main one is always the same: the trend lines. By plotting them on your price chart you can understand what is the main direction taken by the market.
Risk management: for medium and short term trading it is essential to learn how to manage operational risks to protect your investment capital. For every trader it is of fundamental importance to master the techniques to minimize risk and maximize profits. By using the entry and stop loss order types available on the trading platforms, you can minimize the risks and when this happens you can also make more profitable trades. These are the basic elements of any trading system.
Technical analysis for trading: to have the best results with fast trading operations it is important to know how to do technical analysis of the financial markets. Thanks to the analysis tools it is possible to better understand which direction the price will take and therefore make better and more winning decisions, especially in statistical terms.

Short-term trading works practically the same way as medium-term trading, the only big difference is that the second is the one in which those who love to stay on the market a little longer engage themselves. You can choose to hold a position open for even a few days to maximize profits where the market allows.

Insight: What is Online Trading

Long term strategy

If we look instead at long-term trading as a strategy, this is suitable for those who prefer to have open positions for a few months, but in some cases even for a few years. Such transactions are carried out on the basis of the fundamental factors affecting the markets.

The main problem with this strategy is that it requires more capital from the beginning of operations, because the goal is to be able to overcome the main market fluctuations without too many problems. Only with a large margin is it possible to remain with an open market position over the long term.

Earning with long-term strategies requires patience also and above all because you aim for constant and gradual gains over time. In short, the aim is not to make burning actions with big profits, but patient operations that in the end bring a lot of money into cash. The ideal market to implement this strategy is the equity market. Usually those who choose to invest in the stock market do so especially thinking about the long term.

For long-term trading, stocks are an excellent asset because they are easy to monitor and are not subject to severe market volatility. To understand how actions work, just talk about Amazon: those who set up long-term operations on this company are unlikely to find surprises along the way.

From a strictly operational point of view, long-term trading is more advantageous due to the fact that opening and maintaining an open position requires less time and analysis than medium and short term trading. More in-depth analyzes are required here and we should try to operate only when we are sure of the data coming from the various technical indicators (such as Elliott waves just to give an example).

Practical advices

How to do long-term operations? Here are 3 key tips to follow:

Limit the use of financial leverage: to operate in the long term it is not necessary to go all in and increase the financial leverage so much. The important thing is to trade volumes that represent a small percentage of your assets, this allows you to easily sustain the weekly and daily volatility.
Look at operating costs: doing online trading it is essential to be able to contain operating costs in order to have as much capital as possible always available. The main cost applied by online trading brokers is the Spread, which is not very heavy to manage, but is still a factor to pay attention to.
Operational analysis: before entering the market it is necessary to evaluate all the elements at one’s disposal. It is important to understand if the time spent in trading is advantageous compared to the potential profit you are aiming for. Long-term traders should employ quite considerable capital to ensure that the investment pays off the time spent. However, many make a trivial and very common mistake among long-term traders; not to reach the target profit, even using the best strategy, and this can happen when using too low a leverage.

Regardless of the strategy you intend to use, whether it is short, medium or long term, the important thing is to always calibrate your approach based on personal needs. Every trader can feel comfortable in one or the other way of trading, the most important thing is to understand which mode fits perfectly.

Too many traders are convinced that they are using one trading strategy and one approach rather than another just because they hear success stories from some trader. But in reality this approach is wrong and risks making the trader feel uncomfortable in the operational phase. Using someone else’s strategies is like you don’t feel at home.

For this we invite you to give up making a slavish copy of the style of other financial operators. The important thing is to find your own way and remain faithful to it for as long as possible. This way you never stop optimizing and personalizing your trading approaches, on a positive path that will ultimately lead to success.

Read also: Trading with minimum deposit

Trading Strategy: the best ones

So let’s get to the point. Now we want to present the main trading strategies used by industry experts. All fall into either the medium / short-term approach to trading, or the long-term one.

The strategies proposed here work. There is no doubt about this. The operations of thousands and thousands of professionals around the world are based on them. Whether or not you will be successful using them depends only on your degree of skill in putting them into practice.

In this sense, the practice and time you spend trading in a constructive and learning-oriented manner will be essential to reach a high level of application of the methodologies proposed here.

Winning Trading Strategy: Day Trading

If there is a widespread approach to trading, this is Day Trading. We can say that there is almost certainly no more used strategy. The reason for this success perhaps lies in the fact that it is a very balanced technique. On the one hand, it offers more “relaxed” trading rhythms compared to very short-term strategies, on the other hand it manages to keep operational risks fairly low.

If we add to all this some excellent earning prospects, it will be easy for you to imagine why Day Trading has become so transversal among operators all over the world. But let’s give a definition of Day Trading: it is that strategy that involves the purchase or sale of goods and securities on the financial markets during the same day.

Fundamental for those who do day trading is to keep the positions open only during the day, always avoiding pushing during the night. This offers a twofold advantage:

Increase profits: earnings with Day Trading shifts on a daily basis, so it is easier for a trader to keep track of their results and increase or decrease activity according to their needs. With clever capital management this can mean increased profits.
Savings: this type of trading allows you to save to the extent that many online trading brokers require a small commission to keep positions open even during the night. It is therefore a great way to preserve your investment capital.

Safe Trading Strategy: Buy and Hold

The Buy and Hold is a completely different approach. This type of strategy is fully part of long-term trading, because it embodies all its characteristics. Those who choose to apply the Buy and Hold are called a “drawer”, this is because once a trade has been opened, it puts it aside, puts it “in the drawer” even for months before deciding to close the position upon reaching a Take Profit point o Stop Loss.

Such a technique is considered by many to be a form of passive trading, but in reality it is not. In most cases you choose this form of investment to protect yourself and not lose capital. It is in fact one of the most effective trading strategies for those who do not want to have an b.

To put Buy and Hold into practice it is necessary to operate on long-term charts, with weekly, monthly or annual time horizons based on the desired personal perspectives. The goal of the “holders” is to exploit market trends for as long as possible, that is, those that are formed on large financial cycles and that are more predictable and manageable.

Smart Trading Strategy: Swing Trading

One of the smartest trading strategies, for real speculators, is Swing Trading. This strategy can be considered the perfect middle ground between short-term trading represented by day traders and long-term trading practiced by holders.

The main advantage of Swing Trading is the fact that as a technique it is very suitable for beginners. It certainly fits perfectly on all those who do not have a great deal of experience behind them. In addition, it is able to satisfy both those who love the thrill of a more risk-oriented trading, and those who prefer slower rhythms and reasoned operations.

Such a technique is perfect to apply especially in the Forex market. It has all the features you need to get the most out of Swing Trading. Forex offers the right level of volatility and fluctuations suitable for those who intend to exploit the instability of the markets to earn the most.

Positions open and close in most cases within a few days. Fundamental for this technique is to perceive the sentiment of the currency exchange and follow the oscillation, or the “swing”, described over the period of time considered.

Fast Trading Strategy: Scalping

There is no faster trading strategy than Scalping. Those who practice this approach are called “scalpers”, a terminology that perhaps has something to do with the habit of some Native American tribes of taking the scalp of defeated enemies.

This type of trading is not very recommended for beginners, we say it because it requires great technique, concentration and rhythm. It operates on very short periods of time in which the trader does not have much space to think. Scalping is characterized by the identification of various price gaps caused by the bid / ask spread and order flows.

The mechanism behind Scalping is quite intuitive: you have to buy at the offer price and sell at the ask price, this leads to profits based on the difference between the two price points.

The task of the scalper is to keep his positions open for the shortest possible time, therefore it is a hit and run technique useful for limiting operational risks and protecting trading capital. This method requires you to take advantage of small market movements in the short term, using small amounts as an investment.

Given the characteristics of Scalping it is normal that to make truly acceptable profits you have to operate a lot, obtaining a small additional gain from time to time. At the end of the day, the sums are then drawn and it is checked whether the set profit targets have been reached.

Trading Strategy: diversify

This concept also falls within the 10 commandments of the good trader: diversification, as you can verify by discovering the strategies of the most famous traders in the world. In order to protect your investments, a diversification strategy is ideal. Those who choose to always operate on the same asset within the same financial market will hardly obtain the expected profit results.

Indeed, the biggest problem is that there is also the risk of suffering huge losses on capital. Betting “on one horse” exposes you to the risk that that horse is a loser, at which point the capital could suffer and you could even lose it altogether. Now let’s explain what exactly the diversification of the trading portfolio consists of.

It is a protection strategy where the trader makes a selection of assets and securities on which he intends to trade at the same time. It could be stocks, commodities, indices or cryptocurrencies, it doesn’t make much difference. The important thing is to select your portfolio well and expand it enough to feel safe.

An example? Let’s say you have $ 1000 to invest and let’s say you’ve heard that Amazon shares are very affordable. You will certainly want to do an operation on them. Many beginners would be tempted to invest $ 1000 in Amazon stock directly. But what happens if Amazon goes bankrupt? You would lose all 1000 euros.

Much wiser is instead to invest as follows by diversifying the portfolio:

250€ invested in Amazon shares
250€ invested in Forex, on EUR/USD pair
250€ invested in Microsoft shares
250€ invested in Bitcoin trading

By dividing the € 1000 into 4 parts, although you may lose a part of this money, there will always be one investment out of 4 that will suit you well and allow you to recover what is lost in other operations and to make a profit. How? The principle is very simple.

While we must always put a stop to losses, profits let themselves flow. For example, in the investment on Amazon you should try to stop the execution when the loss of € 250 is reached, NEVER go beyond this threshold. Instead, profits can be let go as long as possible, there is no need to close the position if it is positive.

Conclusions

During this guide, we analyzed the importance of trading strategies and why they are so important to achieve results. We have seen how investing without strategies can be bankruptcy and how it puts your investment capital at risk.

This is why our invitation is to start trading, but it is important to do it wisely. Get informed, use only reliable brokers, try to train using a Demo account and read other articles on our OnlineTradingCourse.net portal dedicated to training in the field of online trading and trained until you are ready to dominate the financial markets and achieve maximum success.