Top 3 Most Effective Trading Strategies

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Top 3 Most Effective Trading Strategies

Top 3 Most Effective Trading Strategies

 

As intraday trading gains popularity among millennials and more people want to get on board, Intraday Trading Strategies are becoming more and more in demand. These strategies can give you considerable profit if you apply them with consistent discipline.

A trading strategy is a method based on backtesting and research that is used to purchase and sell stocks according to a predetermined set of rules. Developing a successful intraday trading strategy is quite difficult and demands a great deal of both mental and physical work.

Through this article, I am going to explain to you the top 3 most effective and used intraday trading strategies that you can use to make consistent money out of the market.

 

1. Market structure-based momentum intraday trading strategy

This strategy mainly requires knowledge of two things: market structure knowledge and price action knowledge. In this strategy, we analyse the prior trend, and we trade in the direction of the trend according to market structure.

The Momentum Intraday Trading Strategy is very effective but requires speed in placing orders and good risk management techniques in order to avoid big losses and land healthy profits. The 4 most important rules of this intraday trading strategy are –

1) Selection of the stocks with high volatility.

2) Favorable risk-to-reward ratio

3) Correct position sizing & risk management

4) Technical Analysis Charting for exiting trades

As we can see in the above example, we can take an entry on the pullback and can achieve a good risk-to-reward ratio.

 

2. Capturing reversal with the help of price action

The reversal trading strategy offers a low success rate, but it normally gives a great risk-to-reward ratio as we try to buy at the bottom of the market or sell at the top of the market.

In reversal intraday trading strategy, traders use risk-reward calculations and market data analysis to predict the market reversals and get profit from those reversals. The traders must precisely detect the pullbacks and their strengths, making it a challenging intraday trading method. The daily pivot on charts, which intraday traders must concentrate on while identifying the day low and high, is one of the supporting techniques in the Reversal Intraday Trading Strategy.

 

3. Trading breakouts that have a high volume.

The Breakout Intraday Trading Approach is the most popular and effective intraday trading strategy. Observing when stock prices climb above or fall below a particular level, resulting in an unusually high trading volume, is a key component of this intraday trading method.

Speed is a key attribute of the Breakout Intraday Trading Strategy. It is one of the essential intraday trading strategies that requires quick decision making skills based on the available data.

It is all about observation. If the stock price rises, the intraday trader enters the trade, buys the stock, and sells it at the target price, and vice versa if the stock price falls.

Timing is crucial in the breakout trading method when making important trade decisions. The traders consider long positions and purchase the stocks if there is a rising trend and the price keeps increasing above the limit point.

On the other hand, the intraday trader will take short positions if prices drop below the limit point. The fundamental concept of the breakout intraday trading technique is that prices will become more volatile and continue to move in the same direction if they cross the limit points.

I hope that through this article, you were able to understand the top 3 most effective trading strategies and how you can use them to make profits.

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Happy learning!

 

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