There are two basic criteria for consistently profitable trading, regardless of the type of financial instruments: 1.) A set of good trading techniques and 2.) A set of efficient money management systems. Each asset family (forex, stock and cryptocurrency (crypto) has its own set of characteristics, thus most fundamental-based methods for trading cryptocurrency, for example, will need to be tweaked to operate with other asset kinds.
There are amazing online trading education platforms that cover an extensive range of strategies and best practices for new and experienced traders.
If you’re looking for some options to turn to, you may want to consider the top options currently available:
Warrior Trading, FinEducations and Benzinga Pro
With instant communication, an event on the other side of the world can quickly affect the market. Having access to reliable news sources is more important than ever, but most importantly, traders need to choose and stick to a plan that works for them and their strategies.
This article will touch on 9 top secret strategies traders don’t want you to know about namely;
- Volume-Weighted Average Price Strategy – VWAP
- Support/Resistance and Two Stochastics Strategy
- Parabolic SAR and MACD Strategy
- Grid Trading Strategy
- Monday Open Strategy
- Momentum Oscillators and Bollinger Bands Strategy
- Breakout Trading Strategy
- The Exhaustion Gap Trading Strategy
- Price Action Trading Strategy
1. Volume-Weighted Average Price Strategy – VWAP
VWAP stands for the volume-weighted average price – it’s an indicator that takes into account both the trading volume and the price of a currency. It’s often used as a guiding landmark for big market players like institutions and pension funds, whereas retail traders often disregard VWAP. The rule of thumb for using VWAP is rather simple: a trader must give preference to long trades when the price action occurs above the indicator and consider taking short trades if the price dives below the line.
2. Support/Resistance and Two Stochastics Strategy
Trading using support and resistance (S/R) zones is probably the oldest play in the book. The idea behind this strategy is to determine a strong S/R level by analyzing the trading volume. It’s immensely important to understand where the momentum is taking the price when it approaches the area of intense price interaction, as it hints at whether the line would hold.
3. Parabolic SAR and MACD Strategy
The SAR/MACD Forex strategy is fairly simple and applicable to all time frames higher than 15M and many currency markets. It works best in trending markets, whereas its efficiency tends to decrease. EUR/USD and GBP/USD are the most suitable markets for this strategy since they are more volatile than some low-volume exotic pairs.
4. Grid Trading Strategy
A trader has to place the corresponding orders above and below the predetermined price level at the same distance. The best thing about this method is that it rarely requires an extensive analysis of where a particular market price is going, making it one of the most automatable strategies of average complexity. Grid trading allows market participants to increase the position size while the market is either trending or ranging.
5. Monday Open Strategy
This strategy requires no indicators, as it uses only a clear bar or candlestick chart. On Monday, approximately 15 minutes after the market gets busy. It implies executing one or few trades a week on Monday, approximately 15 minutes after the market gets busy, where a trader opens a position in the direction opposite to its direction on the previous Friday.
6. Momentum Oscillator and Bollinger Band Strategy
Bollinger Bands (BBs) are the most reliable tool for gauging market volatility in the foreign exchange market. The expansion of the bands signals that the price action in the particular currency pair is growing increasingly volatile. A trader must assess the situation on the market with the help of MACD or other momentum indicators to see whether there’s a bullish or a bearish bias to it.
7. Breakout Trading Strategy
Trading a breakout is as old as the hills, but it remained one of the best trading strategies in 2021. Trading on a breakout implies placing a long or short order when the price of a currency moves above (below) the support (resistance) level, and outside the previously established range. The gist of this strategy is to minimize the time when a trader gets caught in a fake-out and avoid being stopped out before the market starts going the right way.
8. The Exhaustion Gap Trading Strategy
An exhaustion gap occurs when the quantity of potential buyers has decreased and sellers have aggressively entered the market. The purchasers may have run out of steam, suggesting that the rising trend is set to come to an end as sellers cash in on previously sustained gains in the stock price.
9. Price Action Trading Strategy
Price action trading involves the study of historical prices to formulate technical trading strategies. Price action can be used as a stand-alone technique or in conjunction with an indicator. It is not unheard of to incorporate economic events as a substantiating factor. Several other strategies fall within the price action bracket as outlined above, but mostly take the length of trade and entry/exit points into consideration.
The Bottom Line
The trick is finding the above-listed secrets to day trading that complement your individual trading style. Active traders can employ one or many of the above strategies, but the risks and costs associated with each should be considered before deciding on engaging in these strategies. Some tools work well for some, but they can leave others no better off. The best hedge against trading the wrong strategy at the wrong time in the wrong asset class would be to take some of the outstanding courses offered online, like Warrior Trading, FinEducations and Benzinga Pro that break down the strategies above, allowing traders to put their best trading foot forward.