Although no strategy is guaranteed to work all the time, traders should choose one trading strategy that suits their needs and personality. You can also combine or use variant or hybrid versions of the strategies described above. Use the trading strategy of your choice to create a complete Trading System.
BREAKOUT / BREAKDOWN TRADING The Breakout / Breakdown strategy is a method in which traders will try to identify entry points for breaking out of a certain price level. If the price breaks higher than the previously defined resistance level, traders can buy in the hope that the price will continue moving higher. Likewise, if the price breaks the support level downwards, the trader can sell in order to close the position at the lower price.
PULLBACK / RETRACEMENT TRADING Pullback / Retracement trading is based on the idea that price never moves in a perfectly straight line. Usually the price makes some kind of pause in the middle of a bigger trend. Traders will wait for the price to correct, or "retrace," before continuing the previous trend.
REVERSAL TRADING In reversal trading, traders try to anticipate a reversal in the price trend. This strategy is considered more difficult and risky. True price reversals can be difficult to spot, but traders will benefit greatly if they can predict price reversals correctly.
CONTRARIAN TRADING As the name suggests, Contrarian Trading tends to go against prevailing market trends. A contrarian trader does the opposite of most other traders and, in fact, bets against the crowd to profit from it. They buy when prices are underperforming, then wait for their performance to improve. Or sell when prices are too high and reap profits when there is a correction. Contrarian trading is considered a very high risk trading strategy.
PRICE ACTION The Price Action strategy relies heavily on the ability to read price data charts, without using Technical Analysis indicators. Sometimes this strategy is called Naked Trading. Price Action users believe that price is considered the main signal of activity in the market. Usually traders use Candlestick patterns or price patterns.
