Chapter 1: Introduction to Trading Strategies
Now that you know all about the basics of technical analysis, it’s time to combine all the knowledge and get to the real deal – trading with a strategy.
What is a trading strategy?
A trading strategy is a plan that helps you decide when to buy or sell in the market. It’s like following a roadmap during a trip—you know where you want to go, and the strategy helps you stay on track to reach your goal. Like a roadmap shows the best route, a trading strategy guides you based on price movements, trends, and risk management.
For example, the strategy might tell you to buy a stock when its price breaks above a certain point or sell if it drops to a specific level. The idea is to make decisions based on a clear plan instead of reacting emotionally to market ups and downs.
Before we dive into the strategies, let’s understand how to make the best of this guide.
How to go about this guide?
This guide lists five trading strategies most suitable for swing and positional trading styles. Ideal for beginners, these are a good starting point that will help you determine your trading style—you will get an idea of what kind of indicators and time frames you are most comfortable with.
Each strategy is divided into 7 sections,
- Overview, which will introduce you to the logic behind the trading strategy
- Indicators used in this strategy, which will list out the indicators that enable the application of the strategy
- Spotting an entry, which will help you determine an entry point for your trade
- Planning the exit, which will help you determine an exit point for your trade
- Stop loss, where you will learn about how to manage your risk as per the strategy
- Examples, which will show you how the strategy can be put to action, and
- A Things to keep in mind section, which will enlist the precautions you should take while deploying the strategy
Note that these strategies are just trading ideas that have worked for years. However, that doesn’t mean that they are totally foolproof. Hence, you can be flexible with them. We also suggest you not deploy your entire trading capital towards a single strategy but rather spread them across.