Ten classic trading strategies

Several common types of trading strategies, learn to be a great god!

Shang Hui

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Several common types of trading strategies, learn to be a great god!

From the foreign exchange encyclopedia column

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Always asked about various trading strategies, novice traders are full of confusion about this topic. It is better to use this article to popularize some of the most widely used trading strategies from the overall concept.

I will try to mention the characteristics of each trading strategy, how to get in and out, and which strategies are suitable for professional traders or novices. I hope I can answer some of your doubts.

What is a trading strategy?

A trading strategy is a trading plan/action that can make you profitable in the financial market. Each trading strategy requires traders to make the following decisions:

Trading what tools. Obviously, the strategy suitable for the stock market may not be suitable for the foreign exchange market;

Admission and exit positions;

Money management: how much money do you plan to invest in each transaction;

Risk management: how much loss each transaction can bear.

Some strategies are complex, while others can be simply described. In any case, traders need to test their strategies. You can choose to test manually or use software. Here are some test methods:

Historical test: Consider the data for enough time to test the performance of the strategy under different market conditions. For example, using the daily chart test, you can find the historical data of the past 2-3 years for analysis, and the number of reference transactions should not be less than100;

Prospective test: try to use strategy to simulate accounts and collect data for at least 3-6 months to see if this result is consistent with the historical test results;

Real market test: the application of minimum trading volume in real market environment mainly depends on whether this strategy is effective and suitable for you.

Trading strategies of professional market participants

Professional participants include investment banks, hedge funds and market makers. They mainly use the following strategies:

High-frequency trading strategy, that is, using algorithmic trading system, trades quickly in milliseconds. This kind of environment is very demanding, which requires expensive equipment and direct connection with the server to save time to the maximum extent;

Arbitrage trading is also an algorithmic trading strategy;

Cross-border arbitrage and time arbitrage: the former trades the same asset in different trading markets, while the latter trades in the same trading market by time difference;

Investment trading strategy: long-term trading strategy based on in-depth fundamental analysis and digital model;

Using transaction volume and market profile is an analysis method based on transaction volume. This strategy analyzes the accumulation of trading volume of a certain price, that is, the range of support level and resistance level.

All professional trading strategies require professional knowledge and expensive software and hardware, but they do provide unique trading advantages.

Basic trading strategies suitable for novices

This kind of trading strategies and systems are much more friendly and can be used by ordinary traders, many of which are based on technical analysis. We can divide these strategies into several categories:

1. According to the trading style

Cattle: There may be 10- 100 transactions a day, and a chart of 1 minute or 5 minutes is used in such a short time. The profit of each transaction is not much and the holding time is short;

Intra-day trading: 2-5 transactions per day, with a 30-minute or 1 hour chart, the profit point and holding time are higher than those of scalpers;

Band trading: 1-2 weekly trading, daily chart is commonly used, and each transaction can earn dozens to hundreds of points. Traders don't have to stare at the chart all the time, because the general holding time is above 1 day;

Long-term transactions: There may be 1-2 transactions in a year. Using weekly and monthly charts, the holding time may be as long as several months or even longer.

2. According to the analysis method

Strategies based on fundamental analysis. It means that traders make trading decisions based on political geography and economic factors. This kind of transaction can be long-term or short-term. Short-term trading strategies such as message trading;

Strategies based on technical analysis. Use the previous price fluctuation to predict the next fluctuation.

3. According to the market situation

Trend tracking: first determine the trend, then find the breakthrough point and trade with the trend;

Callback trading: enter the market when the trend is adjusted to half. The basis is that the market will not fluctuate linearly;

Non-directional trading: determine the interval in which the price stays for a period of time;

Breakthrough trading: determine the breakthrough point of the current price range and trade in the breakthrough direction;

Reverse trading: determining the possibility of price reversal is where the current trend may end. This strategy is considered difficult and risky, mainly because it is difficult to identify where the price is reversed.

4. According to the risk trading method

Pyramid jiacang: If the previous position is profitable, then the next position will double. This is the way to accumulate positions, which is usually suitable for taking advantage of the trend;

Lock positions: short positions open long positions and long positions open short positions. This strategy is mainly used in the foreign exchange market;

Average: Double the investment in loss-making transactions and close the position when the set price is reached. Such as martingale strategy.

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The choice of trading strategy is very important and necessary for every transaction. However, how to choose so many types?

First of all, determine your goal, the time you can trade, and your personality;

Then, according to the above factors, select several strategies to add to your list;

Finally, study the strategy theory that suits you deeply, practice and combine in practice, and find the most efficient and suitable strategy.

From the column

Encyclopedia of foreign exchange

Shang Hui 178 1 article

The elderly spent 300 million yuan on stock trading and invested in more than 1000 companies. For 34 years, he relied on coupons to "eat and drink for nothing".

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