Learn the basic concepts behind the top 5 trading strategies that work today and will continue working in the future. If you’re looking to learn stock trading strategies that work for both beginners and advanced traders in every market environment, grab a cup of coffee and enjoy your free guide.
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The most common trading strategies can be used across different asset classes, including stocks, indices, futures, forex, and cryptocurrencies. Diversification is one of the best ways to reduce the risk of trading.
However, there are many different trading strategies available to choose from. Which approach should you adopt from the different stock trading strategies that are currently out there?
Should you use the common day trading strategies, or swing trading strategies, or other types of trading strategies?
With so many different types of stock trading strategies to choose from, it can become frustrating to chose just one. In some cases, you might want to take elements of multiple different trading strategies and create something entirely your own.
If you're a beginner, it's possible you have tried to use some of the best trading strategies for stocks but, you failed.
If, that’s the case, don’t panic, we’re going to bring you back to the basic stock trading strategies and find one that matches your own personality and financial goals.
Let’s start things off with a list of trading strategies that every trader must know.
Types of Stock Trading Strategies
While you can learn thousands of online trading strategies, they all fall into one of the four categories:
- Popular day trading strategies
- Scalping trading strategies (very short-term strategies).
- Swing trading strategies (medium-term strategies).
- Position trading strategies (long-term strategies).
Easy scalping is probably one of the quickest ways to make money. Active traders can jump in and out of the market in a matter of minutes. On the other hand, the trading strategies for day trading are the most common active trading styles.
Important Note* If you want to day trade or scalp the stock market, you need to know the Day Trading Rules Under $25k.
The positional approach is a passive investment strategy where you buy and hold stocks. At the same time, swing trading allows stock investors to buy and sell stocks on pullbacks and retracements.
Now, that you have an idea of what online trading strategies you can use, we want to point out that sophisticated investors can also use algorithmic trading strategies.
Below you’ll see the beginner’s guide to free trading strategies that work:
Best Trading Strategies for Beginners
The one commonality you'll find with every successful trading strategy is that they have a strong foundation. The idea behind stock trading strategies for beginners is to find a base strategy that you know it can be effective.
As a beginner, you don’t want to waste time, money, and energy with stock day trading strategies that are too complicated to follow.
To become a profitable stock trader, you need to learn how to anticipate future price movements.
With that in mind, we’re going to share with you rule-based trading strategies to conquer the stock market.
In order to filter out the inherent noise that comes with the classical candlestick chart, this method uses range bars.
Range bars are notorious for giving you explosive breakouts. They are more comprehensive than simple price charts.
We use range bars every day in the stock market.
Basically, we look for 3 consecutive counter-trend range bars to develop at key support and resistance levels and buy (sell) once the third bar high (low) is tagged. We’re only looking at this pattern to develop at key support and resistance level.
See the Tesla chart below:
For more details on the range bars trading strategy check out our guide on the best range trading strategy.
Here is another great way to learn stock trading as a beginner:
Breakout trading is a quick way to make money as a trader.
We’ll walk you through a step-by-step process to breakout trading in this guide: Amazing Rectangle Chart Pattern Strategy.
You need to know that a great catalyst that can give you explosive moves in stock prices is the consolidation pattern. In the stock chart below you can see our favorite rectangle chart pattern at work:
Since day trading is one of the most common forms of trading styles, we’re going to share with you our most successful day trading strategies.
Best Day Trading Strategies
The best day trading strategies come with the advantage of reducing the risk of holding stocks overnight. In addition, with some of the basic trading strategies, you can make a lot of money fast.
Now, all day trading strategies that work have one thing in common:
Good day trading strategies will seek to capitalize on the most volatile stocks.
Check our guide for what is the best way to pick volatile stocks for day trading: Best Day Trading Stocks with Mountains of Cash.
Here are our top 3-day trading strategies:
- Day Trading with the Stochastic Indicator
- Bill Williams Awesome Oscillator Strategy – Big Profits, Small Losses
- Best ADX Strategy Built by Professional Traders
Now, let’s discuss the advantages and disadvantages of the most popular day trading strategies:
- Not impacted by overnight gap risk.
- Capitalize on intraday stock prices.
- Stock day traders can move in and out of the market very quickly.
- On the downside, day trading requires a high level of discipline and focus.
If you think day trading is too risky for you, take a look at our most popular trading strategies oriented for longer-term approaches.
Stock Trading Strategies
If you want to grow your trading account and make consistent income, we’re going to share with you our top 5 stock trading strategies.
Which stock trading strategies suit you best?
That’s up to you to decide, but it must be something that comes naturally to you and fits your:
- Financial goals.
For example, if you hold a 9 to 5 job you need a different approach as your availability is limited. Don’t quit your job if you’re not already a profitable stock trader. You need to acknowledge that stock trading is not that easy.
But there is still hope.
If you want to learn how to trade stocks while working a 9 to 5 job you can use CANSLIM Stock Investing Strategy.
The CANSLIM formula was developed by trading Guru William O’Neil and it’s a stock-picking strategy using fundamental analysis. If you’re not sure how to pick value stocks, according to the CANSLIM formula you need to use 6 financial ratios or metrics:
- Current Quarterly Earnings are greater than 25% growth rate over the past 3 quarters.
- Annual Earnings of at least 25%.
- The company needs to develop new products.
- The stock needs to be accumulated by smart money.
- Buying only industry-leading stocks.
- Trade-in tandem with the overall market trend.
If you want to upgrade the basic trading strategies you need to incorporate technical indicators.
Stock Trading Strategies #2 How to Trade Stocks with Indicators
If you want to grow or evolve as a trader you need to incorporate a technical indicator.
One of the most used stock technical indicators that are on everyone’s chart is the volume-weighted moving average (VWMA). That’s very important because we’re looking for them to become self-fulfilling prophecies.
Technical indicators are among the best tools you can use to develop a competitive edge while trading.
You can check out a more detailed VWMA trading strategy.
Check out the stock chart below:
You can tell very easily how the VWMA is showing you the momentum and whether or not it’s in a bullish trend or a bearish trend.
Everyone that is a short-term trader or swing trader should be using a technical indicator to better time the stock market.
Let’s see what‘s the best stock chart pattern.
Stock Trading Strategies #3 Naked Trading
As a stock trader, you should be looking for chart patterns that repeat over and over again. One of the biggest things, why we research stock patterns, is they have a repeating nature. One such repetitive stock pattern is the 4 candle hammer.
If you want to learn how to spot the 4 candle hammer check our full guide HERE.
In short, this chart pattern seeks to capitalize on pullbacks against a strong trend. Stock traders need to look for 3 things:
- Stock need to make a new 20 day high.
- Wait for a 4 consecutive day retracement.
- On the 5th day, buy the stock if it breaks above the 4th day high.
See the stock chart below:
Stock Trading Strategies #4 Insider Trading
When insider buying or selling occurs, you know that the stock price is about to either experience significant growth or fall apart.
When you can see that executives are buying the stock, you can be pretty sure that the stock price is going to move higher. Check out our stock price momentum indicator.
Did you know you can get insider trading info for free?
The Money Flow Index indicator can help gauge the inflow and outflow of money from stocks.
For a complete stock trading strategy, please check our guide here: Money Flow Index – Trading like the Banks.
See the stock chart below:
It’s proven that if you study the insider buying activity you can gain superior returns. Make sure you make it a routine to look at insider trading activity to get a grasp on where the shares of a company may be headed in the future.
Stock Trading Strategies #5 Advanced Trading
Tape reading is one of the best day trading strategies, but it requires a lot of practice before you start to get a feel for how to use the tape. In that regard, tape reading is more like an art than a science.
For a detailed explanation of how to use the tape, please check our Tape Reading Trading Strategy.
The biggest advantage that comes from watching the tape is that you can interpret in real-time the flow of buying and selling orders. So, tape reading can add an extra edge when you try to time the market.
Final Words – Top 5 Trading Strategies
In summary, mastering stock trading strategies takes time, dedication, and due diligence. If you want to learn a new skill then you need to repeat every single day until you master that new skill. With trading is no different. Keep in mind that all trading strategies outlined in this guide have their pros and cons. It’s your duty to weigh the advantages and disadvantages and choose one that fits your trading style.
Before we leave you, here is a short recap of the different types of trading strategies and how they can help you generate an income:
- Scalping strategies can help you generate a quick income
- Day trading strategies can help you generate steady income
- Swing trading strategies can help you generate a consistent income
- Position trading strategies can help you build your wealth over the long-term
We encourage you to try out our best day trading strategies risk-free on a simulator
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