Strategy

Traders tend to use various strategies to achieve their financial goals, we cover the major strategies below.

Fundamental Trader – use fundamental analysis to evaluate the intrinsic value of the asset and analyse factors that could affect its price in the future.

Technical Trader – uses charts, indicators, graphs, and various other tools to analyse historical data. They base their decision on whether to buy or sell an asset

Sentiment Trader – attempts to catch and participate in trends. They often use aspects of fundamental and technical analysis to look for assets that move with the momentum of the market.

News Trader – monitors world news, economic report releases, company announcements, particularly economic and political events, to base their trading decisions off. They hope to benefit from potential volatility caused by significant events.

Arbitrage Trader – attempts to profit from discrepancies in the price of similar instruments on different platforms, markets, or general pricing errors by buying and selling the asset in question simultaneously.

Momentum Trader – looks for and buys assets that are moving significantly in one direction.

Noise Trader – has no real base on which they take trades.

Market Timer – try to determine which direction a particular asset will move within the market, especially when reversals in direction occur.

High Frequency Trader - utilises powerful computer algorithms to trade large numbers of orders in fractions of a second.

TRADING TIME HORIZONs

Once you have chosen a strategy, you may wish to choose a trading style. Some strategies are better suited to different time horizons, but it all comes down to preference at the end of the day.

  • Scalper – may make between a dozen to hundreds of trades each day to accumulate a profit from consistent small gains on small movements in the asset’s price. They will hold trades for very short periods from a few seconds to minutes.

  • Day Trader – a day trader opens positions and closes them within the same day, avoiding leaving any open overnight.

  • Swing Trader – aims to make short-term or medium-term gains, they will take trades that last a couple days or up to several months.

  • Position Trader – focus on growth of potential assets and macroeconomic trends. They strive for long-term gains and hold some of their trades over weeks, months or even years.
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Quiz Questions

Question 1

Trader X, executes trades in quick succession and averages 60 trades a day, what type of trader are they?

Correct - The answer is b. Scalper

Scalpers accumulate profits on small movements in a market’s price.

Incorrect - Please try again.

Question 2

Trader Z, holds trades for weeks and sometimes months focusing on long-term gains, what type of trader are they?

Correct - The answer is d. Position Trader

Position traders look at potential growth of assets.

Incorrect - Please try again.

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Trading Strategies

Explore diverse trading strategies with Spreadex – your gateway to success in financial markets. Master fundamental analysis, harness the power of technical analysis, and stay ahead with strategic news trading.