Trading in the financial markets presents both risks and opportunities. Market trends change every millisecond, as breaking news and economic releases impact sentiment. Giving in to fear or greed can ruin your trading experience and wipe out any profits. Below are a few top strategies that every TiBi trader should know. Applying these will help you cut through the noise without the risk of getting side-tracked. Let’s dive in!
News trading
Keeping current with the latest market news, economic releases, such as NFP for example, and corporate actions is crucial to deciphering market trends. A news trading strategy takes into account up-to-the-minute information and market expectations before and after the news release. It requires skill and minute research abilities. News traders typically analyse the news immediately after it’s released and make swift decisions on how to position themselves in the market.
When trading the news, traders pay attention to the following key elements:
- Is the news fully or partially factored into the price of a specific asset?
- Is the news aligned with market expectations?
Grasping these differences in market expectations is vital when applying the news trading strategy. There are different ways you can make the news trading strategy work for you:
- Treat news releases individually
- Develop a trading strategy for each news release
- Look out for market expectations and reactions, which can often play a more important role than the release itself.
News releases fuel the markets’ evolution by causing prices to move up or down, as supply and demand, monetary policy changes, consumer confidence, employment change, corporate actions, and other key macro and microeconomic factors influence investor sentiment.
Typically, any price change will have already been factored in any such news releases. So, you might want to plan your entries and exits accordingly.
Day trading strategy
Day trading is a common yet high-stakes approach whereby traders quickly buy and sell securities within a single day. Day traders capitalise on small price movements in highly liquid stocks or other asset classes.
Positions can be opened and closed within seconds (scalping, a strategy that can be used with day trading), minutes or hours, to stack potential short-term profit as prices fluctuate. This differs significantly from traditional “buy and hold” practices, as day traders very infrequently hold overnight positions, ensuring all their trades are closed at the end of the trading day.
Day traders employ different techniques to capture these swift price movements, including technical analysis and momentum trading combined with self-discipline and objectivity.
Technical analysis takes a look at past prices and patterns to forecast future trends. Comparatively, momentum trading seeks to capitalise on short-term trends and reversals to secure immediate gains. They both work in day trading.
End-of-day trading strategy
Unlike day trading and news trading, the end-of-day trading strategy focuses on trading near market close, becoming active when it’s clear that the price is about to ‘stabilise’ or close. It requires studying price action rather than the previous day’s price movements. With this in mind, traders preferring this strategy can speculate on potential price movements based on the price action and choose the indicators they wish to use.
Additionally, to limit the risk of loss, traders should apply risk management, such as Stop Loss or Take Profit orders. Unlike other strategies, this requires less commitment on the trader’s part. Studying chart patterns, particularly the opening and closing prices.
The main risk associated with end-of-day trading is the overnight risk, which can be mitigated with Stop Loss or Guaranteed Stop Loss orders.
Swing trading strategy
Moving forward, swing trading is a strategy that involves sides of the price movement. This means that swing traders buy an asset when they assume the price will rise and sell it when they estimate the price will drop.
Although it may seem quite straightforward at first glance, it takes skill and patience to observe the market oscillations as the price swings between an overbought to an oversold state. As you may have guessed, swing trading relies solely on technical analysis, studying chart patterns and analysing individual price movements to spot broader trends.
To be a successful swing trader, you need to interpret the length and duration of each swing and thus determine the key support and resistance levels. As a swing trader, you will also need to identify trends where markets face elevated supply or demand. This will help you tally if momentum is increasing or decreasing within each swing.
During strong trends, you can use retracement swings to determine trend direction and plan your trades accordingly. These points are known as “pullbacks” or “dips”. When a new momentum high occurs, traders will look to buy the first pullback, as the highest probability trade. Conversely, when a new momentum low occurs, the opposite applies – traders will look for the opportunity to sell the first rally.
Although the benefits of swing trading are undeniable, as it allows traders to go long and short across multiple securities, it does pose a certain level of overnight risk. Swing trading is more suitable for experienced traders with a more in-depth knowledge of technical analysis.
Not to worry, TiBi Globe offers a comprehensive range of e-Books designed to accompany you on your trading journey. Whether you are a beginner or an advanced trader, these resources will help you get the insights you need to master swing trading and many other trading strategies.
But before you head to the TiBi Globe website and download any or all of the e-Books available, let’s discuss one more strategy.
Trend trading strategy
You may be familiar with the adage “Trend is your friend”. That’s what the trend trading strategy is all about. Just like swing trading, the trend trading strategy is broadly a technical approach to the markets, requiring traders to closely follow trends and enter a trade only in the predetermined trend direction.
This trading strategy requires a clear trading system to determine and follow trends. It’s also vital to be vigilant and observe breakouts signalling a change in trend direction and adapt your trading strategy accordingly. Market reversals are some of the major challenges that trend traders face. To mitigate them, you can use a Trailing Stop Loss order.
Indicators such as the Moving Average Convergence Divergence (MACD), the Relative Strength Index (RSI) and the Parabolic Stop and Reversal (SAR) can help you follow trends with precision. They are also available on the TiBi Globe MT 5 platform, enabling you to stay the course.
But staying the course is not enough to secure your success as a trend trader. It is just as important to acknowledge when your system/strategy is no longer working. This happens when fundamental factors enter the picture. This is why it’s essential to keep up with the fundamentals such as economic releases or socio-political events impacting the markets. Doing so will help you limit your losses and adjust to the new trends much quicker.
Now that you know some of the most popular trading strategies, how will you apply them? TibiGlobe offers a choice of account types suitable for every trading style and budget. If you’re new to trading, the demo account option will likely provide you with the opportunity to test-drive the TibiGlobe platform and explore any of the strategies described in this article without investing real funds. Ready to get started?
Risk Disclaimer:
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Prices can fluctuate rapidly, and past performance is not indicative of future results. Please refer to the full risk disclaimer on our website.
The information provided does not constitute financial advice and should not be relied upon as such. You should seek independent advice before making any investment decision.
