Trading Strategies

Trading strategies provide a structured way to approach the market. This page introduces common strategy types used by traders, focusing on logic, market conditions, and risk awareness rather than profit promises.

What Is a Trading Strategy?

A trading strategy is a predefined set of rules used to decide when to enter and exit trades. A sound strategy considers market conditions, risk management, and trader psychology — not just entry signals.

Trend Following Strategy

Trend following focuses on trading in the direction of the dominant market trend. Traders look for higher highs and higher lows in uptrends, or lower highs and lower lows in downtrends.

Breakout Strategy

Breakout strategies aim to capture strong price movements when price breaks above resistance or below support levels. Volume and volatility often help confirm the validity of breakouts.

Strategy Insight: No strategy works in all market conditions. Understanding when a strategy performs best is more important than finding a “perfect” strategy.

Scalping vs Swing Trading

Scalping involves very short-term trades with small profit targets, while swing trading holds positions for days or weeks to capture larger price movements. Each approach requires different time commitment and risk tolerance.

Risk Management in Trading

No trading strategy can survive without proper risk management. Controlling downside risk is essential for long-term consistency.

Define a maximum risk per trade
Use stop-loss orders consistently
Avoid increasing position size after losses
Focus on long-term consistency, not single trades

Market Conditions Matter

Strategies perform differently depending on market conditions. Trending markets often favor trend-following strategies, while ranging markets may suit breakout or mean-reversion approaches.

Strategies define your trading approach, but execution depends on tools and trader psychology.

Continue with Indicators & Tools or learn about Trading Psychology.