Trading Strategies For The Financial Markets - Stocks, Commodities, Forex

On this page you will find a list of trading strategies that you can apply in any markets. I have listed the strategies under the heading of day trading, swing trading and position trading. So, feel free to take a look at these different strategies and see which one fits you.

*I'm still in the process of building this trading strategy page. More trading strategies will be added in the future.

When you approach the financial markets, it is always best to start with a trading strategy. Having a strategy is like having a detailed plan to make money in the markets. "If you fail to plan, you plan to fail:.

"If you fail to plan, you plan to fail"

Day Trading Strategies

Day trading is very risky and are suitable for more experienced traders. If you have a day job, it is best not to day trade. Anyway here are some day trading strategies for those who are interested in day trading.

Bullish Day Trading Strategies


Bearish Day Trading Strategies

  • The 5 Min Bearish Descending Triangle Trading Strategy
  • The 5MD200 Bearish Trading Strategy
  • The 5MD50 Bearish Trading Strategy

Swing Trading Strategies

Swing trading are trades that last from 2 days to about 2 weeks. They are suitable for people who have a day job. Those who do not like to stare at their trading screen from minute to minute may also find swing trading a better approach.

Bullish Trading Strategies

Bearish Trading Strategies

  • The Break Uptrendline At 20 MA Trading Strategy
  • The 50M Resistance Strategy
  • The Large Bear Candle Rest And Collapse Trading Strategy
  • The Daily Consolidation At Resistance Trading Strategy
  • The Break Uptrendline At 20 MA Trading Strategy
  • The TT Trading Strategy
  • The TWIN Tower Trading Strategy
  • The Bearish Kicker Trading Strategy
  • The Bearish Engulfing Trading Strategy
  • The 60 Min Bearish Cross Box Trading Strategy
  • The Aggresive Bearish 15MD20 Trading Strategy
  • The 60 Min Triangle Break Down Trading Strategy
  • The 60 Min Descending Triangle Trading Strategy

Position Trading Strategies

Position trading involves holding a position for a few weeks to few months. They are excellent for people who are always far away from a computer. Those who love to travel will also find these trading strategies very useful.

Bullish Position Trading Strategies

  • Correction To Weekly 20 MA Trading Strategy
  • The Weekly Consolidation Box Breakout Trading Strategy
  • The Weekly BT Trading Strategy
  • The Weekly Stoch MACD Buy Trading Strategy
  • The Weekly Bullish Engulfing Trading Strategy
  • The Weekly Doji Bullish Reversal Trading Strategy

Bearish Position Trading Strategies

Why Its So Important To Have A Trading Strategy

If you ask successful traders, they will usually tell you that they did it using a proven trading strategy. If the pros are using strategies, why are the rest not using it?

Trading strategies are actually blueprints for success

If you can find a trading strategy that gives you a success rate of 70% you will be profitable in the long run. If you do not have a trading strategy, your success rate might only be 50/50. Like the flip of a coin, your trading career is based on nothing but chances.

Trading strategies keep you from making bad decisions

If you have a solid strategy, you will not simply enter and exit stocks. Every trading strategy has a number of criteria to be satisfied. If the stock does not satisfy the criteria then you should not enter the trade. It automatically forces you to avoid lousy candidates.

Having a strategy allows you to measure success and improve your trading

If you do not have a strategy, it is difficult to measure your success. You do not know why you made money on this position and lose money on another. If you have a strategy, you can put all your trades into a spreadsheet and then measure the success rate of the strategy. At the end of the analysis, it helps you to refine the strategy and your entry and exit points. You can become better and better with the strategy.

Trading strategies keeps you from emotional stress

The emotion of greed and fear is very powerful in the financial markets. Greed can make you make bad mistakes. Fear can make you miss opportunities. Having a trading strategy allows you to have an emotional balance.

How To Choose A Trading Strategy That Fits You

There are lots of trading strategies here and also many other different trading strategies which you can find all over the internet. Try to discover as many as possible and paper trade the strategy. Then choose one trading strategy that fits you.

  • Breakout strategies
  • Continuation strategies
  • Reversal strategies

These are the 3 broad categories that trading strategies fall into.

Some people will be more comfortable trading breakouts while others like to play continuation. There are others who find it more useful to catch the top and bottoms. Try to discover which kind of strategies you perform better with.

Day Trade, Swing Trade Or Position Trade

You will also need to determine whether you want to day trade, swing trade or take longer term trades. Day trades are suitable for full time traders but not suitable for those who have a full time job.

You can still play the markets by swing trading or position trading if you have a job. Swing trades and position trades are also suitable for those who have many other commitments, have a lack of internet connection and love to travel.

How To Spot Day Trading Stocks That Explode Higher Immediately

Time Frames

Even if you selected the type of trading you would want to do, you need to choose a suitable time frame for you to do your staple analysis. Most swing traders will work off the daily charts and 60 min charts. Day traders can use time frames ranging from 15 min to 5 min down to the 1 min charts.

How To Create Your Own Trading Strategy

As you journey into the world of trading, you will either find a trading strategy that fits you or you will develop your own trading strategy that caters to your needs and fits your personality. The best is of course to create your own trading strategy.

The benefits of creating your own strategy

If you are able to come out with your own trading strategy, it will give you many many advantages. Some of them are:

  • A strategy that fits your personality
  • You know the strategy in and out
  • You know when it works and when it does not work
  • You know when to play bigger and when to play smaller
  • You don't need to follow other people's ideas

The elements of a good trading strategy

In order for a trading strategy to be considered good, you need to have all of the below:

  1. A pattern that occurs quite frequently
  2. A pattern that has an edge
  3. A pattern that gives a good reward risk ratio
  4. A setup
  5. An entry point
  6. An exit point
  7. How to manage the trade once you put on the trade
  8. Position sizing
  9. Portfolio management

1. A pattern that occurs quite frequently

In order to make a living in the markets through trading, you need to be able to rake in profits quite frequently. It does not make sense to have a trading strategy that gives you a trading signal only once every 3 months. You won't even know if the trade works out or not.

For a swing trading candidate, you need to be able to have at least 1 or 2 setups each week. For day trading, you need to have at least 1 trade a day. That way, you will be able to generate profits that you can use to pay for your lifestyle.

2. A pattern that has an edge

When you try to come out with a trading strategy, it is best to have a pattern that will give you an edge in the markets. An edge is an advantage that you have over others. A trading strategy with a success rate of 55% will have a 5% edge in the long run. A trading strategy that has a 70% success rate will have a 20% edge in the long run.

All it takes is to have a success rate of more than 50%. 

Try to develop a trading strategy that has a success rate of 55% to 70%. If you can have a higher success rate, then its better.

3. A pattern that gives a good reward risk ratio

Not only do you need to have a trading strategy that gives you a high success rate, you need to factor in reward risk ratio as well. This is where you will read about traders who are only correct 50% of the time and are still profitable.

The reason is because they have a trading strategy that gives them a good reward risk ratio. A reward risk ratio of 1:1 is the minimum you should aim for. Which means you still need to have a success rate of 55% and above.

If you have a reward risk ratio of 1.5:1 or 2:1 or even 3:1 then you need not worry too much about the success rate. The higher the reward risk ratio the better it will be. One downside of a higher reward risk ratio is you may find fewer trades. So its important to find a balance.

4. A setup

Every trading strategy needs a valid setup.

If you don't have a valid setup, you may enter too early or you may enter too late. Traders have been known to lose out on maximizing their trades by entering too early and get stopped out or entering too late and compromising their reward risk ratio.

For example, if you trade a stock that bounces off its daily 50 Simple Moving Average, the setup will require you to have the stock touch the 50 MA before you enter. The setup might also require your stock to move above the 5 min 200 MA before you enter.

Setups are actually rules that you need to follow. They protect your account and help you to make good trades. A good trade is one that follow the rules of the setup.

If you make a trade without following the rules but end up making money, that is still a bad trade. On the other hand, if you make a trade following the rules but lost money, that is still a good trade. In the long run, the rules will help you maintain a steady growth in your equity curve.

5. An entry point

This is closely related to the setup.

An entry point is the area where you decide to enter into a position. They may be as simple as entering when the stock trades above the highs of the previous day's candle. Or it may be a bit more complex.

It does not really matter. Although I must say that simple is better. As you develop the trading strategy, you will be able to spot the best entry points and refine your entry rules. Which is why specialization and focusing on a few trading strategies when you start out is so important.

6. An exit point

An exit point consist of two areas. 

First is the stop loss point and secondly the take profit point. Each trading strategy will require different stop losses and take profit points. If you day trade, it makes sense to take your profits by the end of the day. You also need to respect resistance areas because day trades can often go back down when resistance hits.

Swing trading strategies that involve range trading might require you to take profits when the target is met. On the other hand, strategies that follow the trend may allow you to let your profits run on a bit longer to capture the meat of the trend.

Try to find the best place to put a stop loss and also the best places to take profits.

7. How to manage the trade once you put on the trade

Trade management is equally as important as finding the best setups. Once you are in a trade, you must imagine all the possibilities that might happen. Some questions to ask may be:

  • What am I going to do if the stock gaps down the next day below my stop loss point?
  • What am I going to do if the stock gaps up the next day past my profit target?
  • What am I going to do if the stock shoots up rapidly in the 1st hour and hits my profit target because of some news?
  • My stock has gone up tremendously after my initial target is met, what should I do?

As a trader, you must be able to visualize all the possibilities that might happen to the trade. Try to think of a solution and an action for every possibility and write them down. Then you will be able to act calmly in all situations and not be blinded by emotions.

8. Position sizing

Position sizing is something that new traders rarely think of.

If you have a $10,000 account, you need to know how many stocks you are going to buy. You need to know the entry levels and the exit levels so that you are able to come up with the correct size to buy.

Don't just go in and buy all the stocks you can just because you have $10,000 to risk. Calculate how much you are willing to lose on each trade and then only buy the amount of stocks that you need.

For example, if the stock is trading at $50.00 and your stop loss is at $48.00 and you are willing to risk $500, you will only buy 250 shares of the company.

9. Portfolio management

Portfolio management is actually not an easy thing to do. Even professional money managers have so many things to think about in managing client's money.

Your goal is to avoid blowing up your trading account and to grow it slowly over the long term. 10 years later, you want to look back at your account and see a good amount of growth while being able to minimize risk.

Some of the things you need to think about with regards to portfolio management are:

  • How many trading strategies will I use in this trading account? 1 or 2 or 5? 
  • How much should I risk in each trade? 1% or 2% or 5%?
  • How much should I expose my account to each week/month/any given time? 10% or 20% or 50%
  • Should I hedge my long trades with shorts or put options?
  • Should I only long stocks in this account or do long and short trades as well?
  • Should I only play stocks or add in options or futures in this account?

Remember, how you answer the questions above will result in the volatility of your equity curve. The goal is always to grow your account with the minimum volatility.

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