Trading Strategy

By Rohit 8 Comments 19 Dec 2018
Trading Strategy

An Introduction

Trading strategy is a fixed plan that is designed to achieve a profitable return by going long or short in markets.Trading strategy can in brief be used by any fixed plan of trading a financial instrument, but the general use of the term is within computer assisted trading, where a trading strategy is implemented as computer program for automated trading. Trading strategies are based on fundamental or technical analysis, or both. For every trading strategy one needs to define entry/exit points and money management rules. Bad money management can make a potentially profitable strategy unprofitable.

Types of Trading strategies

  • Trading Signals
  • Long/Short Equity Trading
  • Pairs Trading
  • Swing Trading Strategy
  • Scalping Trading
  • Day Trading
  • Trading on the news
  • Social Trading

Trading Signals:-

Trading Signals

Trading signal is simply method to buy signals from signals provider, is a very effective strategy to determine the best time to buy or sell a stock or currency pair. Aggregate analysts forecasts are often used in momentum trading strategies. TradeWinx provides best buy sell signal software with more then 95% accuracy.

Long/Short Equity Trading:-

Long/Short Equity Trading

A long short strategy consists of selecting a universe of equities and ranking them according to a combined alpha factor. Given the rankings we long the top percentile and short the bottom percentile of securities once every re-balancing period. In other words Long/short equity is an investing strategy that takes long positions in stocks that are expected to go up and short positions in stocks that are expected to go down. A long/short equity strategy seeks to minimise market exposure, while profiting from stock gains in the long positions, along with price declines in the short positions. Although this may not always be the case, the strategy should be profitable on a net basis.

Pairs Trading:-

Pairs Trading

A pairs trading strategy consists of identifying similar pairs of stocks and taking a linear combination of their price so that the result is a stationary time-series.The strategy’s profit is derived from the difference in price change between the two instruments, rather than from the direction each moves. Therefore, a profit can be realized if the long position goes up more than the short, or the short position goes down more than the long (in a perfect situation, the long position rises and the short position falls, but that’s not a requirement for making a profit). It’s possible for pairs traders to profit during a variety of market conditions, including periods when the market goes up, down or sideways – and during periods of either low or high volatility.

Swing Trading Strategy:-

Swing Trading Strategy

Swing Trading strategy is really just comprised of two elements. The first element of any swing strategy that works is an entry filter. Second element swing trading indicators aka the Bollinger Bands. The second element is a price action based method. Swing traders buy or sell as that price volatility sets in and trades are usually held for more than a day.

Scalping Trading:-

Scalping Trading

Scalping is a method to making dozens or hundreds of trades per day, to get a small profit from each trade by exploiting the bid/ask spread. It’s a trading style specialising in taking profits on small price changes, generally soon after a trade has been entered and has become profitable.

Day Trading:-

Day Trading

The Day trading also know as Intraday Trading is done by professional traders, the day trading is the method of buying or selling within the same day. Positions are closed out within the same day they are taken, and no position is held overnight. Strictly, day trading is trading only within a day, such that all positions are closed before the market closes for the trading day.

Trading on the news:-

The news is an essential skill for astute portfolio management and long term performance is the technique of making a profit by trading financial instruments (stock, currency, etc.) just in time and in accordance to the occurrence of events.

Social Trading:-

Social trading is all about using other peoples trading behaviour and activity to drive a trading strategy. Its a service that allows investors to replicate the operations of expert traders. requires little or no knowledge about financial markets, and only requires that the user make a correct selection of traders to follow, especially considering the percentage of successful operations and the diversification of the financial instruments traded by the expert.

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