Trading Strategies page 3

Short-term forex trading approaches offer us a number of attractive benefits. These include the opportunity to make money by placing short and long positions within a single trend; to exit a position in the evening and not worry about the portfolio while the market is closed; to trade with a fairly low starting capital. Nevertheless, when starting short-term trading, one must know its basic styles, which include pipsing, scalping, intraday, and swing trading.

In the bright, loud advertisements everything is so easy and beautiful: novice traders get quick returns with minimal time expenditures, and they reach stable earnings. In reality, the situation looks somewhat different: the majority of newcomers play by intuition and lose the whole deposit in a short period of time. Only a precise and skillful strategy will let the forex traders reach their goal. Today we will talk about trading strategies: the essence of trading strategy, their types, and application. Basically, everything a beginner trader must know before jumping in with both feet.

During the pandemic alone, the U.S. Federal Reserve bought a whopping $3.3 trillion in Treasury bonds and $1.3 trillion in mortgage-backed securities to lower borrowing costs. The reverse process, quantitative tightening (QT), where central banks reduce balance sheets, is much rarer. The Fed is the only central bank that has actually made such an attempt, but it had to stop abruptly in 2019 because of market turmoil. So the asset reduction plan would take the central bank into relatively uncharted territory.

Currently, the forex market offers numerous different tools to improve trading. Experts in financial markets develop both simple trading strategies, which will be convenient for novice traders, and complex systems, combining several strategies. Besides, experienced participants in the market develop their own strategies for their trading. They base their systems on the elements of technical analysis, trend lines as well as support and resistance indicators.

Every trader has at least once heard of aggressive intraday trading when numerous trades are placed during a trading session. Such a trading style is called scalping. Today we will learn what scalping is, how trading using this method works, and what its advantages and risks are. What Is Scalping in Plain Language? Scalping is a kind of speculative intraday trading strategy based on opening many short-term trades to get a small return on them and sum up the expected rate of return.

One of the key concepts of technical analysis is a trend. Many strategies are based on determining where the market is moving and whether it is at the beginning or the end of that process. Such information is extremely useful for the trader. The likelihood of the continuation of the trend can be predicted by evaluating the intensity of trading. The strength of the market movement is often referred to as momentum, and there are several indicators created to determine it. One of them is Momentum, and today we will learn about its readings, settings, and application in forex trading.

The Envelopes technical indicator is one of the simplest indicators when in forex trading and is included in the list of tools on classic platforms. This indicator is based on the observation that after the price rises or falls, it returns to the main trend in any case.  

Finding beneficial strategies in the stock market is not easy. One of the proven ways is to look for stock market anomalies. A stock market anomaly is a rate of return or investment strategy that seems to disprove the efficient market hypothesis. Today, most investors agree that markets are quite efficient, even if they do not believe in a pure form of market efficiency. But the belief that markets are not completely efficient has led many professionals to look for new market advantages and disadvantages.

Nowadays, there are numerous trading approaches and systems both for trading on forex and CFD contracts. And since it all can be transformed into a computer algorithm, the number of automated trading systems is proportional to the number of ready strategies. Even if you already have a ready strategy for financial gain, it can be computerized in the form of a forex trading robot, which will do the work of the trader.

The use of algorithms in trading (algotrading) is a trend of the last decades, which has changed the market in many ways. Any automatic system can easily surpass a human in speed, productivity, and endurance, while it would be almost impossible to compete with a machine.