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Simple Trading: Trading in simple terms and strategies

Simple Trading: Trading in simple terms and strategies

New to trading? You will quickly come across the obvious. In the beginning, you need to find an effective and simple trading method.

To define the best strategy, it is important to understand the risk and decide what is appropriate for you in terms of trading methods. By considering your personality and your investor profile, it is necessary to develop a strategy that respects, for example, money management and risk management.

However, the best-known are generally Day trading and Swing Trading. In this article, we will give you insight into the simplest trading methods, including momentum trading, trend and growth following strategis. So, let’s get started.

What is the easiest trading strategy?

This effective and simple trading strategy is the easiest to understand and implement, and the one most people know best.

The simplest of trading strategies is certainly trend following. It assumes that a rise in place has a very high probability of continuing in the same direction, therefore, with even more rise.

The trend following strategy

It is certainly one of the most popular trading strategies, especially in Forex. It is called a directional strategy or a trend-following strategy and consists of identifying existing trends;

 Trend-tracking tactics involve following the trend, which means purchasing when prices rise and selling when prices begin to decline over an extended period.

Momentum trading method

This trading method, largely based on the previous one, will also follow trends.

Where before, the trend-following strategy had the principle of continuing to progress in a given direction, here we will additionally use volatility.

In other words, we will wait for a situation with breakouts.

A breakout is a sharp acceleration in the price of a stock, either up or down. It results from a flat calm and, therefore, from a pronounced lack of interest in the action in question.

Momentum investing involves purchasing securities that are on the rise and selling them once they appear to have reached their highest point. The objective is to capitalize on market fluctuations by identifying potential buying prospects during temporary upward trends and subsequently selling when these securities begin to lose their momentum.

Swing trading

Swing trading is all about profiting from price changes. This is a speculative strategy in which the tradable asset is kept for a few days only in order to take advantage of variations in its price.

To make gains from swing trading, traders follow the evolution of a stock market value. They buy a security at a level that seems low to them, to exit shortly afterwards with profits. Typically, this style of trading spans just one to four days.

The value investing strategy

It is a trading method based on investing according to intrinsic value. In other words, it concerns everything that constitutes the company, whether it be a competitive advantage, perspectives or some easily quantifiable elements.

The idea here will be to try to buy an asset whose price is undervalued by the financial market compared to the intrinsic value.

Value investing is a technique for investing that seeks to discover stocks and assets in the market that are undervalued. It is rooted in the belief that markets can occasionally misjudge the worth of securities, creating chances for investors to purchase them at a reduced price and gain from their subsequent rise in value.

The growth strategy – growth investing

In this trading strategy, we will seek to buy an asset whose price will grow strongly because the company will also grow strongly.

Its growth may be based primarily on estimates of sales growth, or earnings, or market share through fundamental analysis.

In the stock market, growth investing is a buying strategy that looks for companies that are expected to grow at an above-average rate compared to their industry or the broader market. Growth investors tend to favor smaller, younger companies poised to expand and increase profitability potential in the future.

We may also have some news that will help us at this level. However, we are therefore faced with titles which will be rather volatile and which carry a higher risk. But the prospect of gain can be much greater.

It’s up to you to make your choice according to your personality and according to what you want. Once you have chosen your trading strategy, before you actually start trading:

Simple trading FAQ

What is the easiest strategy to learn?

The directional or trend-following strategy is the easiest to master and apply. It consists of following a trend already in place. But a strategy that is almost as simple is that of Momentum, already covered and which will offer more results while keeping a certain simplicity.

What are the easiest assets for trading?

The simplest of trading is that of stocks. These are among the easiest products to understand and master. With a good method, the risks of investors losing money when investing in these assets are very low.

What is the best strategy for beginners?

Which type of trading is best for beginners? Beginners should consider starting off with swing trading, which means holding an investment for more than one day and less than a couple of months. It’s less time-consuming and stressful than day trading. Stocks are particularly good for beginners to test the waters.

The post Simple Trading: Trading in simple terms and strategies appeared first on FinanceBrokerage.

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