Trading strategy
What is a trading strategy?
A trading strategy is a set of specific trading rules, which a trader is guided by when making decisions on conclusion of deals. Most often it is a set of indications from various technical or fundamental indicators, which in a certain combination give a trading signal to open a deal. Trading strategies are used not only for trading currency pairs, but also for trading binary options, stocks, commodities, futures, etc.
What are the different trading strategies?
In the currency market, depending on the duration of holding a trading position, the following types of trading strategies are distinguished:
- Short-term strategies: from a few seconds to one day
- Medium-term strategies: from one day to a week
- Long-term strategies: from a week or more
Short-term strategies allow you to earn more and more often, but there are more losing trades. On the other hand, long-term trades can be made only a few times a year, but you can take a big profit at a time.
Depending on the type of trading, trading strategies can be categorized into:
Because of the use of specialized technical indicators special mention should be made of trading strategies for binary options.
How to choose a trading strategy ?
Each trader chooses his own trading strategyBased on preferences, character and availability of free time. However, every trading strategy has the same goal - to minimize risks and losses and ensure the stability of profits.
Trading strategies can be implemented manually, i.e. a trader independently sets positions, monitors their execution and closing. There is also a possibility to automate the strategy, i.e. to create a trading advisor (robot), which will perform the specified algorithms.
It is also worth distinguishing between the concepts of strategy and system. Trading system - is a general set of rules for working on the market, which includes strategy, money management system, trader's internal psychological settings, etc.
Learn more about how to choose a profitable trading strategy