Trading Strategies

There are a lot of trading strategies to make a profit. If you begin to study all of them your head will be spinning. For a successful trading you usually need to use two or three methods to have a regular profit and not to spend much time for trading. Online trading simplify your life and use of the easy and clear strategy maakes it richer. Here we will review the simplest strategies the beginner should know and more complicated high-risk methods allowing making a big profit. It will give you an opportunity to trade without studying lots of information and initiate a creation of your own successful strategy.

All trading strategies are based on different signals depending on the chosen analysis methods. We will study three basic directions of the technical analysis:

1) Candlestick analysis;

2) Work with strength levels;

3) Computer analysis.

We will also discuss trading the news and asset management strategies.

Technical Analysis Strategies

Candlestick Analysis

This type of analysis studies the candlestick chart patterns. Each pattern signalizes about a tendency reverse or continuation. No need to learn all aspects of analysis as there is too much information online. It will be better to focus on the most often and recognized candlestick patterns. At first we will discuss the reversal signals.

Tendency Reversal

Engulfing Candlestick Strategy

This pattern gives us a reversal signal. The signal appears when a candlestick has a bigger body than the previous one with a reverse direction. It is an engulfing candlestick. When you see this signal you should be prepared and see a direction of the next candlestick. If it has an engulfing direction you can trade on the candlestick following it.

Squat Candlestick Strategy

The squat candlesticks often signalize about a tendency reverse. Usually such candlesticks tell about the market uncertainty in the current direction. They mostly appear at important price levels. There can be one or some candlesticks there. Having seen a candlestick with a small body and long shade you should be prepared for a reversal of the current tendency.

Tweezers Candlestick Strategy

The other strong reversal signal is a tweezers candlestick pattern. Tweezers consist of two candlesticks with the different directions and same maximums or minimums: in the descending tendency the tweezers candlesticks will have the same minimums, and in the ascending tendency the tweezers candlesticks will have the same maximums. The maximums and minimums of the tweezers can be the close prices and candlestick shades. The candlesticks of this model can appear one by one or have one or more candlesticks between them. This signal is strong and clear enough to strengthen or be strengthened by other candlestick patterns.

Tendency Continuation

Three Methods Strategy

Three methods continuation signal appears during a trend pause. On the chart it looks like some small candlesticks appeared after a long candlestick. The main feature of this pattern is that some new small candlesticks are within a size range of a previous candlestick. This pattern can include three or more candlesticks. A big candlestick in the trend direction will close a pattern and give a continuation signal. You should open a deal after closing this candlestick.

As you can see the candlestick analysis is very effective and can be used to find trading signals.

Work with Strength Levels

Strength levels show the points where the price chart can stop or reverse. Use of them to identify the price levels for trading makes a trader's life easier. Let us start our discussion with the levels of support and resistance. The support and resistance levels show historical levels, local minimums and maximums, trend and channel lines on the price chart. If the price has reached any such level it signalizes the price can stop or reverse here. There are two trading methods - breakout and reversal strategies.

Breakout Strategy

According to this strategy you open your deals when the price chart has broken out a current level and continued its movement in the same direction. A deal should be opened after a candlestick body has broken out a support or resistance level and a new candlestick moves in the same direction.

Reversal Strategy

A main aspect of this strategy is that we open a deal after the price chart has reversed. If a candlestick has reached the level and failed to be closed outside it we should start trading. A candlestick can touch the level with its shade or body. If a candlestick is closed inside a strength level and its shade touches it the price will not be able to pass it. A signal confirmation will be a new candlestick in a reversal direction.

As you see breakouts and reversals at the support or resistance levels give good signals for trading. These signals can be strengthened or weakened by signals of the candlestick analysis and together they give us more chances to open a successful deal.

Computer Analysis

Computer analysis means the use of indicators to find an entry point. At present they use three indicators for analysis:

1) Moving averages;

2) Bollinger bands;

3) Alligator.

Moving Average Strategy

We will discuss the moving average trading signals. The price chart and moving average line give us two types of trading signals: a tendency reversal - when the price chart has crossed a moving average line, a tendency continuation - after the price has bounced from the moving average (an indicator is usually used as support or resistance levels according to the price chart position). To receive these signals we need to install the moving average indicator with a long period. It is necessary to understand you should choose an individual period for each tool.

Bollinger Band Strategy

The Bollinger bands are easy in use and can replace the trend channels as the indicator shows the most often range of price movement. To work with the Bollinger bands you can use the signals when the price breaks out the bands - after a sharp breakout of the usual price range the price tends to return back to a central band.

Alligator Strategy

The other indicator is an Alligator. It is useful as shows a beginning of the trend movement. You cannot use it as a basic indicator as it does not give the trading signals but you can use its lines as the levels of support and resistance. In general the indicators help to trade and allow analyzing a situation and taking a decision quickly. The indicators are good as a computer makes all calculations and gives ready trading signals. The only problem in using indicators is a necessity to set the indicator individually for each trading tool.

News Trading

We all know that the market often reacts on the news publication and if the news is strong we can expect a strong price movement. The news trading strategy is risk enough but thanks to it you can make a good profit for a couple of minutes. But you can lose your assets for these few minutes if trading the news. It about the online trading - here everything is easier and less risky. Trade online our risks are limited by an amount of the deal and it is very good if our forecast has not been proved. But except the fixed losses we have the fixed profit.

Money Management

This paragraph is very important for all traders who want to achieve stability in getting a profit. The best money management strategy is tracking your losses. At first you should define the loss limit level where you should stop and review the effectiveness of your current trading strategy.

Conclusion

We have discussed only the basic strategies of hundreds available trading strategies. Having studied and practiced them you can build a good foundation for your future successful trading strategy. You need to choose two-three tools for analysis and start earning. On our website you can always find detailed information about any trading method, explanations and comments. Gain experience earning with us!

Psychology of Trade

Technical Analysis

To trade in the trading market successfully you should forecast price behavior on the chart. One of the instruments for this kind of job is technical analysis.
Technical analysis is a method of price movement forecasting on the base of price movement history. Studying movement history where the price will go in future. As you may have guessed the main object of technical analysis is a currency rates history or price movement chart. The price movement chart is built on axes where the vertical axis shows a price and the horizontal axis shows time.

There are some price types where you can find some repeating patterns. If you have studied and remembered them you will be able to forecast charts based on building method and time intervals.

The simplest one is a line chart which displays price changes in single prices connected with a line. These prices are fixed on the chart when time interval ends and each new price is connected by a line with a previous price.

So, what the technical analysis is? The technical analysis uses charts to study the price history and find patterns. To use the price movement history for analysis we need to know three rules (axioms) of technical analysis:

1) Price moves forward – price change is always forward, whether price raises or drops, and it has its period. This axiom is a basis of tendency (trend) analysis and has the following conclusions: a current direction of price movement in the market most probably will continue rather than stop; and price will be moving in one direction until it becomes flat.

2) History repeats – if the price level was reached before it can be reached again in future. The same goes to price behavior graphical models which can appear in future with the same results as in the past. Studying the history of these price movement patterns gives us an opportunity more likely to foresee the further movement direction;

3) Price considers everything – any event affecting on currency price (political, economic and natural) is included into the price and it raises or drops depending on positive or negative affect of this event.

So thanks to basic rules of the technical analysis we can more likely forecast the price movement, determine its direction and period of this direction. It is necessary to understand that the market does not always follow the patterns found in the price movement history. Such unusual situations may happen, but with each new experience the trader will be able to find more predictable situations and make more precise estimation. For this very reason you should understand that if you have less experience you will use the most visible and prominent price movement patterns better to receive a maximum result. Technical analysis is not a science but it is more likely an art. And if a beginning trader is more attentive and hardworking he has more chances to receive a desired result.