Financial Market

To become an effective trader, you must try to know and understand the trading strategies that you can use in CFDs and other forms of trading.

News Trading Strategy

Just like how its name gives emphasis to news, this strategy involves the use of news and other market expectations when trading. Trading the news requires a strong mindset because news can travel fast through social media nowadays. Traders will have to assess the financial news immediately as soon as it was released to the public.

Tips:

  • Treat the news release individually.
  • Create a strategy to be used for certain news releases.
  • The market reactions towards the news are sometimes more important than the news release itself.

End-of-day Trading Strategy

This trading strategy is used during the near closing of the markets. End-of-day traders are more active when they see the price is about to close or settle down. This trading strategy uses the study of price action and comparing it to the price movements of the previous days. The strategy requires lesser time commitment compared to other strategies used in the financial market.

Benefits:

  • It is ideal for most traders.
  • Requires less time commitment.

Swing Trading Strategy

The word swing trading is based on the trading of both sides of the financial market. Swing traders will try to analyze the market and if it thinks that the price will rise, they ‘buy’ security. In contrast, they ‘sell’ the security if they think that the price will fall. Swing traders depend their decisions on the oscillations of the market as the prices swing back or forth. They use a technical approach when analyzing the market which is generally achieved when one studies a chart or analyzes the individual movement that makes up the bigger picture.

Tips:

  • Using retracement swings is required for strong trends when entering a direction.
  • Look for the highest probability when there is new high momentum.
  • The use of a pattern recognition scanner when identifying chart patterns can be used as part of the technical analysis.

Day Trading Strategy

Intraday trading is also known as the day trading strategy is mainly for traders who are active in the daytime. They treat trading as a full-time profession and they take advantage of the price movement in the market throughout the trading day.

Benefits:

  • They offer no overnight risk.
  • They have limited intraday risk.
  • It is time flexible.
  • It offers multiple trading opportunities.

Trend Trading Strategy

This strategy is used by a trader who is also using technical analysis to define a trend in CFDs. They only enter a trade according to the direction set by the predetermined trend. They use different trend-following tools to analyze the market such as commodities, equities, currencies, and treasuries. Patience is very important in trend trading because ‘riding the trend’ can be a very difficult task. But if you have enough confidence in your trading system then you won’t have to fear anything.

Tips:

  • You must stay alert whenever the trend is ending or when there are changes.

Choose the timeframe to follow.