Top 10 Different Types of Trading Strategies in Stock Market

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Trading in the stock market is not a blindfold game. A trader has to plan a strategy based on specific patterns, indicator on which he would trade in securities. Trading with a defined strategy will not only help you to choose the best stock, but it will also help you find out the buying and selling levels to minimise risk, maximise profit from stock move. A trading strategy will also help you to minimize your losses if the market does not move as per your expectations. Hence, choose from different types of trading strategies and enjoy safe trading.

Most Common Top 10 Trading Strategies

1. Intraday or Day Trading

Intraday trading or day trading is one of the most common and popular trading strategies most of traders use to trade globally. In day trading you can enter into a trade position and have to close your position on the same day before the market closes. There are no restrictions you can trade many times during the day and can earn profits with intraday trading.

Also Read: How to Do Intraday Trading: Best Stocks, Charts & Strategies

Intraday is one of the riskiest trading strategies you might incur losses if the market or stock is not moved as per your expectations. Here you can use the technical indicators to know the best levels of buying and selling or book the profits to make your intraday trading successful. For intraday trading, you can use indicators like RSI, MACD, Bollinger Bands and other Oscillators that will help to know the market trend and trading range in the stocks.

Also Read: What is the Best Indicator for Intraday Trading in TradingView

2. Trend Based Trading

Trend-based trading is another strategy traders aim to capture the trading opportunity when the market is moving in a direction or trending. As per the trend, you can enter into the trade position and hold till the trend ends or you earn a significant amount of profits. To make the best use of trend-based trading, you need to identify the right trend.

Also Read: How to Identify Trend in Stock Market: 10 Points to Find Trend

In an uptrend, you can enter into long positions, while in a downtrend short-selling or selling strategy works. However, there could be no trend or the market might move sideways with a clear direction, here you can wait for the momentum or breakout in the market. As soon as the trend is defined entering into the trade position at the right time is necessary.

Also Read: How to Find Trending Stocks for Intraday Trading: Ten Rules

3. Momentum Trading

When there is a spike or huge movement in the price of a stock, a momentum-based trading strategy works. Some stocks don’t have significant movement due to lack of volume or low trading activities, but when there is some kind of news, events or corporate actions taken by the company. The momentum can be in any direction that you need to identify.

Sometimes there could be a false signal, and only a smaller moment happens and no further movements. Herr you should check the news or corporate events, the trading volume and use other technical indicators to confirm the reason behind the momentum. Once you realize the momentum could continue, you can take the trade position timely.

4. Swing Based Trading

Swing-based trading is another trading technique you need to know. When the market swings in both directions, you need to identify the range of swings. On high swings, you can sell and on the lower side, when the swing is at the bottom you can buy the stock. Swing trading is useful in the short-term in which need to hold your position from a few days to a few weeks.

Also Read: Best indicator for swing trading

Swing traders take advantage of oscillation in the market in which price swings between up and down range providing trading opportunities for them. Trading in the swings would be not easier unless you apply certain technical indicators to identify the right buying and selling points. In swing trading, you need to find the support and resistance level.

5. Breakout or Breakdown Trading

The breakout or the breakdown of the price from a trading range gives a trading opportunity to traders. This usually happens when the price comes out from a trading range or breaks the trajectory in which trading for many days. A strong momentum in the stock with the surge in volume pushing the stock price breaks the barrier and moves with new trends.

Also Read: What is Breakout & Breakdown How to Identify Breakout in Stocks

When the stock price or market moves in the upward direction, it is called a breakout, here you can create the long position. While a breakdown trading is when the price or market goes in a downward direction giving the opportunity for short-selling to traders. To trade with the trading strategy you need a confirmation of other indicators to ensure there is no false breakout or breakdown. Use the technical indicators to confirm the trend and enter into a trading strategy.

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