Best stock trading strategy ever


This article will show you some of the most common trading strategies and also how you can analyze the pros and cons of each one to decide the best one for your personal trading style. The top five strategies that we will cover are as follows: Breakouts Breakouts are one of the most common techniques used in the market to trade.

They consist of identifying a key price level and then buying or selling as the price breaks that pre determined level. The expectation is that if the price has enough force to break the level then it will continue to move in that direction. The concept of a breakout is relatively simple and requires a moderate understanding of support and resistance. When the market is trending and moving strongly in one direction, breakout trading ensures that you never miss the move.

The expectation is that the price will continue moving with the trend and actually break the extreme high and continue. With this in mind, to effectively take the trade we simply need to place an order just above the high or just below the low so that the trade automatically gets entered when the price moves. These are called limit orders. It is very important to avoid trading breakouts when the market is not trending because this will result in false trades that result in losses. The reason for these losses is that the market does not have the momentum to continue the move beyond the extreme highs and lows.

When the price hits these areas, it usually then drops back down into the previous range, resulting in losses for any traders trying to hold in the direction of the move. Retracements Retracements require a slightly different skill set and revolve around the trader identifying a clear direction for the price to move in and become confident that the price will continue moving in.

This strategy is based on the fact that after each move in the expected direction, the price will temporarily reverse as traders take their profits and novice participants attempt to trade in the opposite direction. The expectation is that the price will continue moving with the trend and actually break the extreme high and continue. With this in mind, to effectively take the trade we simply need to place an order just above the high or just below the low so that the trade automatically gets entered when the price moves.

These are called limit orders. It is very important to avoid trading breakouts when the market is not trending because this will result in false trades that result in losses. The reason for these losses is that the market does not have the momentum to continue the move beyond the extreme highs and lows.

When the price hits these areas, it usually then drops back down into the previous range, resulting in losses for any traders trying to hold in the direction of the move. Retracements Retracements require a slightly different skill set and revolve around the trader identifying a clear direction for the price to move in and become confident that the price will continue moving in.

This strategy is based on the fact that after each move in the expected direction, the price will temporarily reverse as traders take their profits and novice participants attempt to trade in the opposite direction. These pull backs or retracements actually offer professional traders with a much better price at which to enter in the original direction just before the continuation of the move.

When trading retracements support and resistance is also used, as with break outs. Fundamental analysis is also crucial to this type of trading. When the initial move has taken place traders will be aware of the various price levels that have already been breached in the original move. These are the levels that they will look to buy or sell from later on.

Retracements are only used by traders during times when short term sentiment is altered by economic events and news. This news can cause temporary shocks to the market which result in these retracements against the direction of the original move.