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Stock trading: the most popular and effective strategies
Stock trading: the most popular and effective strategies Online trading is a whole complex that requires certain knowledge. Particularly you need to know special strategies for a successful trading. There are lots of them, however, that’s why it’s highly appropriate to study absolutely all of them. Therefore, in general, you need to use 2-3 strategies to get profit.
The main difference between the all strategies is in the price movement signal receiving method based on a certain type of analysis. There will be represented 3 main and the most used methods in the article. These are:
- Candlestick analysis;
- Work with the strength levels;
- Computer analysis.
Successful trading: technical analysis strategies
- the first in TOP is candlestick analysis;
The combinations which are creating candlesticks in the chart - is the main method in this analysis. Whereby it must be considered that each candlestick gives a signal on a tendency’ growth or reversal in the opposite direction.
Tendency reversal
- Let us first consider the strategy with a candlestick engulfing usage;
Such a candlestick combination is providing a signal that is showing a tendency reversal in the opposite direction. Under this method the signal is appearing at the moment of candlestick formation which is bigger than previous one. The first one is called engulfing candlestick.
Once it got in there you should look closely. If the candlestick is directed towards engulfing, then you may open a deal on the next one candlestick to it. And you'll benefit.
- A second strategy with a squat candlestick using;
This type is also often signaling about trends reverse. The appearance of this candlestick generally is saying about the market uncertainty. A squat candlestick mostly is arising exactly at the price level. Once this candlestick is coming, you should prepare for the trends reverse.
- The third work strategy with a tweezers combination
Tweezers candlestick combination is also saying about trends reverse. The highs and the lows in tweezers may be either closing prices or candlestick shadows.
Candlestick combinations may go for each other or there could be one or few candlesticks between them. The good thing about this signal is that’s clear, quite strong and may enhance or be enhanced existing within other candlestick combinations.
Successful trading: trend continuation
The first strategy is "The three methods". According to this strategy, the signal that is showing trend continuation occurs in a pause moment of trend development. This phase appears of several small candlesticks set in the chart. They appear straight after a long candlestick. The emergence of new small candlesticks within a defined size of a previous candlestick is the key factor that showing this particular model creation.
The number of candlesticks may be 3 or more. The big candlestick towards trend will be the end of model and a signal to trend renewal. The deal should be made right after a closure of such a candlestick.
Trading strategies: Work with the strength levels;
Strength lines actually are the basis of work. They are created in points where the price can stop or reverse. The volume of risks will be considerably reduced if to use them for determination of the entry point.
The breakout game is also one of the efficient strategy. This trade method differs by a deal opening when a price grew out of the candlestick level tick but still moving in original direction.
We’ll next consider a reversal trade strategy. The most remarkable feature is the fact that the deal is made only after the reversal of price direction.
The main signal to start a deal is the candlestick inability in pursuit of it close, when a certain level has reached. The additional signal - when a candlestick is closed inside a strength level and its shadow has touched it, then price is not able to pass it. Following candlestick in a reversal direction will be a signal confirmation.
These signals could be strengthened or weakened by signals of the candlestick analysis that together give us more chances to open a successful deal.
- The second one in TOP is a computer analysis;
The main feature of the method is in the indicators usage. The following indicators are used today for trading on such method.
- Moving average;
- Bollinger bands;
- Alligator
Now, lets consider each of them in some detail. So, “Moving average” indicator’ core is in two signal types formation at once. The first one is a trend change, a trend continuation after a bounce from the moving average level (the indicator is used as a support or resistance level in accordance with a price position towards it).
You need the moving average with a long period to receive these signals. It should be noted that you need to choose period for every instrument only individually.
Bollinger bands indicator is next one on the list.
Bollinger bands are also very easy to use. They even can replace the trend channels plotting. This is due to the fact that the indicator shows the price fluctuation where the last one is staying most of the time.
For the work with the Bollinger bands you may use the moments when the price transcends its borders sharply as the signals. The price is trying to return to the central line of indicator while moving sharply beyond the price fluctuation.
The last one contender is the Alligator indicator. This indicator by itself is useful because it shows a beginning of a trend movement. But using it as a main indicator is not always appropriate as the indicator is not always giving the signals by the deal beginning. Nevertheless if to use it as a support line it will give a good result.
The main advantage of the indicators is their convenience and time saved. This is so because the computer by itself is fulfilling the majority of the operations. It’s estimating the situation properties and is forming ready-to-use signals.
But, here’s the thing - every indicator should be configured to a certain trade instrument, therefore firstly you have to spend some time.
News trading is a way to get or lose everything.
Trade market is sharply responds to a news emergence. Such a reaction allows to earn solid funds in a few minutes, but at the same time you can spend it in the same time. Method is extremely risky, but also is very profitable.
At the same time, unlike online trading, here the income is not limited to the amount of a deal. But it is also worth remembering that trading has definitely less risks, but at the same time it has some limitations.
