5 Trading Strategies Every Online Trader Should Know

Online trading may seem easy, but the sad truth is that it’s not. It’s a complex, risky process that can lead to enormous financial losses if you're not careful. That is why, before you start trading online, you should enroll with an accredited academy like the AvaTrade new Academy to learn the basics and hone your skills.

After gaining sufficient knowledge, you must now pick a suitable trading strategy. Here’s a breakdown of today’s best online trading strategies.

1. Day Trading

Day trading involves purchasing and selling one or more securities within a single day. If you become a day trader, you can buy and sell several securities within any stipulated time, provided your activities are limited to a day. This means you cannot use day trading to invest long-term or capitulate on long-term market moves.

If you’d like to trade during the day and exploit minute intraday price movements, day trading will make more sense to you. And the best thing about this strategy is that you won’t sweat over overnight risks and will be better positioned to capitalize quickly on the ever-shifting market conditions. But day trading has one downside: you can’t use it to profit from long-term upward market drifts.

2. Swing Trading

Expert traders often predict future security prices and market performance using indispensable tools like technical analysis. And after making the predictions, some acquire securities, hold them for a couple of days or months, and wait for prices to swing in their favor. This strategy is known as swing trading.

As a swing trader, your primary objective is to profit from anticipated price swings and market oscillations. Your opportunities arise from back-and-forth price swings and changing market conditions. Using this strategy has its fair share of perks. For instance, it doesn't force you to make long-term commitments. Conversely, it exposes you to overnight and weekend market whipsaws.

3. Scalping

Would you like to leverage small price changes and accumulate profits over time instead of holding long-term positions? Scalping can be a perfect option for you. With this strategy, you can open and close trading positions within a very short period, like a couple of seconds or minutes, and exploit minute price changes in the market.

Scalping can be a good strategy for anyone looking to profit from multiple price changes in any direction. But note that since scalping offers smaller gains, if you choose it, you’ll have to execute many trades per day, which can be tedious and costly in the long run.

4. News Trading

News trading strategy allows you to trade based on breaking news concerning relevant elements like currencies and equities. This strategy lets you capitalize on recurring announcements like a company’s quarterly earnings or emerging stories like a sudden financial crisis.

If you become a news trader, source your updates from a credible source. This will position you to make decisions based on accurate and insightful information.

5. End-of-Day Trading

As the name suggests, adopting the end-of-day trading strategy limits your trading decisions to after-market hours. Simply put, as an end-of-day trader, you open your positions and buy or sell securities after the exchange has closed for the day. If you are an experienced trader, this strategy can allow you to rake in profits from the volatility usually associated with the first and last trading hours.

Recap

Before profiting from trading, you must choose a strategy that suits your needs and preferences. Different trading strategies are available today, including the ones discussed here. Review their requirements, pros, and cons to ensure you pick the right option. Additionally, consider factors like your trader personality and risk appetite.