Trading Strategies

BUY AND HOLD

Buy and hold is the only guaranteed winner...if you hold long enough. Most traders reading this are looking for the larger returns of day trading. But Warren Buffett proved you make billions this way.

FUNDAMENTAL TRADING

Day traders never use fundamentals, but great investors like Graham and Buffett have proven fundamental trading will work.

Typically these traders look for investment value, based on book value, price to earnings, or less often growth predictions.

TREND FOLLOWING

Trend following works in any time frame. This includes day trading. If you only trade with the trend on clearly trending days, you will make a lot of money. The key is to recognize the trend as early as possible, and to enter early and add to your trade.

TICK TRADES

Mark Cook was a firm believer in the tick trade. He won the US investment championship in 92 with 563% profit. He taught that high tick levels were a contrary indicator, and price would short term, fall.

SCALP TRADING

Scalp trades are based on understanding the predictability of very short term

price movements, then seeking small, quick, profits. Traders follow rigorous rules and are in and out of markets.

FADING OVERNIGHT LEVELS

Overnight markets often create highs and lows that the next day's market seeks

out and will test. Price may be

rejected, or may stall at these levels

only to go higher.

BREAK FROM BALANCE

Balance is common in all markets and is

described as a trading range. Price may stay in these ranges for some time, but eventually will break be able to break out. These breaks can be trending opportunities.

MARKET PROFILE MEAN REVERSION

Price often remains in a range, short and longer term. These are areas that bulls and

bears agree show value. Because of

this, price may repeatedly revert to these

areas, providing trading opportunities.

VALUE AT MOVING AVERAGES

Moving averages represent average price (fair price) over time. When price reaches these levels, traders may see this as an opportunity

to get in a trade at a value level. Typical moving averages are 9 and 20.

RESPONSE TO NEWS

News moves price quickly. This can lead to opportunity, as price goes too high, or too low. Typically the first bar is a huge outside bar, followed by an inside bar. How price reacts from here can lead to good trades.

CANDLESTICK PRICE ACTION

Price action is based on making decisions after each bar close. Most often managed on a 5 minute chart, it can be used on any timeframe. How the last bar formed, in context to all the previous bars, is important.

USING INDICATORS

Some traders use indicators for trade entry and exit. There are many with the most simple being moving averages. Others include RSI, MACD, Volume profiles like OBV, stochastics, bollinger bands and more.

MOMENTUM TRADES

Momentum traders finds stocks with high volatility, and gets "on board" by buying strong price movement up or selling strong downward movement. The opposite of "buy low sell high", this is still a common approach.

TREND REVERSAL PATTERNS

Every trader knows about "trading the trend",b ut trading major trend reversals is a good strategy. The key is to wait for a strong trendline break, further test of the extreme, and then strong reversal momentum.

FADING ALL BREAKOUTS

This will work! Why? Because most breakouts fail. Markets tend to do what they have been doing. This means stay in trading ranges and reject breakouts. With proper trade management this can be profitable.

SWING TRADES

Swing trading is fun. Nothing is more pleasurable than seeing your trade work, and continue to work most of the day. Swing trades can provide much more profit to winners, than your losses on losers. The key is trade management.

AUTOMATED TRADING

Wall Street Firms do this all day, everyday. Firms pay huge sums to rent space as close to the exchanges as possible, to improve their entry price. But any trader can set up automation and make the right trades. The key is having the proper algorithm.

TURTLE TRADING

Not aware of turtle trading? Google Richard Dennis. Based on following specific rules, and taking all trades, the turtle traders made huge money by following trends. With most of the money made over only a few trades, this is still used today.

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