Top 5 Best Trading Strategies in 2021

Top 5 Trading Strategies that work in 2021

Table of Contents

Introduction

The most common trading strategies can be used for various asset classes including stocks, indices, futures, currencies, and cryptocurrencies. Diversification is one of the best ways to minimize trade risk.

Nonetheless, there are many different trading strategies to choose from. What approach should you take in the various stock trading strategies that exist today? Wondering whether to use a day trading strategy, a swing trading strategy, or any other type of trading strategy?

Choosing just one can be frustrating due to the different types of trading strategies you can choose from. In some cases, you may want to engage in several different trading strategies and create something entirely your own. If you’re a beginner, you may have tried the best trading strategies but failed.

If so, don’t panic. Going back to basic trading strategies, you will find a strategy that suits your personality and financial goals. There is no one-size-fits-all solution to figuring out which trading strategy is the best and most profitable. The best trading strategy is individual-based. This means that you need to take your personality into account and develop the best trading strategy for you. What works well for others can be disastrous for you.

Conversely, strategies that others have discounted may work for you. So, experimentation may be needed to see which trading strategy works. You can also get rid of things that don’t suit you. One of the most important aspects to remember is the timing of your trading style.

 

Types of trading style

 

There are many types of trading styles. This can include short timeframe and long timeframe. These styles have been widely used for many years and continue to be a popular choice on our list of best trading strategies for 2021.

 

Scalping

These are very short movements that only take a few minutes. Scalper aims to quickly beat application/spread questions and make some profit before departure and is considered one of the most advanced trading strategies. This strategy typically uses low time frame charts such as those found in the MetaTrader 4 Supreme Edition package. This trading platform also offers the best scalping indicators. An example of this type of trading is the -1 minute trading strategy.

Day trading

These are discounts that end before the end of the day. This eliminates the risk of negative effects of large overnight movements. Day trading strategies are common in beginner trading strategies. Crafts can only last for a few hours, and the price range can usually be displayed for an hour or two.

Swing trading

Traders are holding jobs for several days who want to take advantage of their short-term price patterns. Swing traders usually look at the bar every 30 minutes or an hour.

Position trading

Follow the long-term trend and try to maximize the profits from significant price increases. Long-term traders usually see the end of the daily chart. The best position trading strategy requires tremendous patience and discipline from traders. This requires a good knowledge of the basics of the market.

 

Best trading strategies: Our Top 5 picks

Professional traders can use a number of trading strategy guidelines, but the best trading strategies for consistent profit can only be achieved through a wide range of practices. Below is a list of some of the best trading strategies that can help you find the one that is suitable for your personality!

1. 50-Pips a Day Trading Strategy

One of the latest trading strategies used is a 50 point trading strategy that leverages the initial market movements of highly liquid currency pairs. The currency pairs GBPUSD and EURUSD are some of the best currencies that can be traded with this particular strategy. When the indicator closes at 07:00 GMT, the trader takes two or two positions as opposed to the pending order.

When one of them is activated by a price change, the other operation is automatically closed.

The profit target is set at 50 points and the stop loss is 5-10 points above or below the GMT 7 candlestick is formed. This is implemented for risk management. Once these conditions are in place, the market will have to do the rest. Day trading and scalping are short-term trading strategies.

However, it is important to ensure effective risk management, as the shorter the lead time, the more transactions are performed, which results in more risk.

Trading performance has not been proven over time and is only a platform of ideas that can be used. Past performance is not a reliable indicator of future performance.

2. Daily Charts trading Strategy

The best traders prefer daily charts over short-term strategies. Compared to the 1-hour trading strategy or the shorter time frame strategy, the daily charts have less market noise. Because these charts take longer time, they can give you more than 100 points per day, which can lead to the best deals.

Daily trading signals are more reliable than signals on a lower time scale, and may have greater profit potential even if there are no securities in the trade. Traders also don’t have to worry about daily news and random price fluctuations. The approach is based on three main principles.

• Trend determination:

The market is trending and consolidating, and this process is repeated periodically. The first principle of this style is to find the remaining market movement. One way to spot trends is to look at data for 180 periods. The next step is to identify the height and slope of the turn. You can refer to this price information on the live chart to determine the market direction.

• Focus:

It takes patience and you have to immediately abandon the urge to go directly to the market. Stay away and keep your capital for big opportunities.

• Low Leverage and Large Stop Loss:

Be aware of large fluctuations in the interception market. However, using a larger stop does not expose a lot of capital to risk.

1-Hour Trading Strategy

This strategy allows you to utilize a time frame of 60 minutes. The best currency pairs to trade with this strategy are EUR/USD, USD/JPY, GBP/USD and AUD/USD. In terms of trading strategy resources used for this type of strategy, the best MACD can be found in MetaTrader 4 and MetaTrader 5.

Purchasing transaction rules:

If the MACD histogram deviates from the zero line, you can open a long position. The stop loss can be adjusted with the latest low swing.

Selling transaction rules:

If the MACD histogram falls below the zero line, you can go short. In recent years, you can hit a stop loss on a high swing.

The AUDUSD hourly chart is shown below. The red line indicates a scenario where the MACD histogram is larger and lower than the zero line.

best trading strategies

3. Weekly Trading Strategy

While many traders prefer weekly trading, which offers more opportunities in a narrower timeframe due to market volatility, weekly trading strategies can provide greater flexibility and stability. Weekly candlesticks provide extensive market information. The weekly trading strategy is based on the size of small jobs and avoids excessive risk.

For this strategy, traders can use the most common price trading patterns such as candles, haramis, and hammers.

One of the most common trading patterns is a hammer which looks like the image below.

best trading strategies 22

The opposite of the hammer is the shooting star with the sample represented in the image below:

best trading strategies 2021

The chart below shows the weekly price action of NZDUSD and examples of the patterns shown above.

The chart below shows an example of the weekly price movement of the NZDUSD and the pattern example illustrated in the image above.

best trading strategies 2021

 

Price Action Trading Strategies rules

The best trading strategies always use a means of pricing, also known as technical analysis. When it comes to technical currency trading strategies, there are two main styles: trend tracking and anti-trend trading. Both of these trading strategies aim to generate revenue by recognizing and using price patterns.

The most important concepts in terms of price patterns are support and resistance. In simple terms, these conditions represent the market’s tendency to bounce off previous highs and lows.

  • Support is the least market trend previously established.
  • Resistance is a market trend that falls from a previously established peak. This is because market participants tend to rate follow-up prices at recent highs and lows.
  • What if the market is nearing a recent recession? In short, buyers will be attracted to what they think is cheap.
  • Bias trading style is different from the following trends. They tend to sell when new highs appear and buy when new lows occur.

 

4. Trend-Following Strategies

Sometimes the market moves down and results in range breakout or start a trend that goes beyond resistance or below the support. How did this happen? When the support line drops and the market moves to a new low, buyers start to hesitate. This is because buyers constantly notice low prices and want to wait for the bottom.

At the same time, some traders are forced to quit their jobs or open short positions because they sell panic or believe the price could fall.

This trend continues until traders’ confidence begins to recover once sales are depleted and prices are determined to stop falling. The trend-following strategy encourages traders to buy the market when they break resistance and sell the market when they break support.

Also, trends can be dramatic and lasting long. Due to the size of your business, this type of system can be your most successful trading strategy. Trend tracking systems can use indicators to notify traders when a new trend has started, but of course, there is no reliable way to know this.

The good news is: If the indicator can establish a time when the trend is more likely to begin, then the probability is tilted in favor. An indication that a trend can form is called an onset. Breakout refers to when a price falls outside the highest or lowest price for a certain number of days.

 

best trading strategies 2021

 

For instance, a 20-day breakout occurs when the price rises above its highs in the past 20 days. You need to consider a system that follows a trend over a long period, during which period fluctuations in the market can lead to a loss of profit. These transactions can be psychologically more complex. When the market is volatile, the trend becomes more hidden and the price movement becomes stronger. Therefore, the trend-based system is the best trading strategy for the quiet and biased foreign exchange market.

 

best trading strategies 2021

 

Range bands are known for providing sharp cuts. It’s more detailed than a simple price chart.

A perfect example of a simple trend-following strategy is the Donchian trend system. Below is a daily EURJPY chart showing the Donchian indicator is set to 20 bars.

 

best trading strategies 2021

 

There are extra rules for trading when market conditions are more favorable for the system. This rule is designed to filter cuts on long-term trends. Simply put, you are looking at a 25-day moving average (MA) and a 300-day moving average. The direction of the shorter moving average determines the acceptable direction. These rules state only:

Go short, when the 25-day moving average is lower than the 300-day moving average.

Make a buy order if your 25-day moving average is higher than your 300-day moving average. The trader is in the same vein as the entry but after a 10-day break. This implies when you’re going long and the market falls past the last 10 days, you may want to sell to get out of the trade and vice versa.

 

4-Hour Trading Strategy

One of the potentially useful and successful trending strategies is a 4-hour trend tracking strategy that can also be used as a swing trading strategy. This strategy uses a 4-hour base chart to identify potential signal trading sites. The 1-hour chart is used as a signal to determine where the actual site should be opened.

Always remember that the time frame of the signal diagram should be at least an hour lower than the main diagram. For this strategy, two sets of moving averages are chosen for the best results. One is a moving average of 34 periods and the other is a moving average of 55 periods. The MA line must be correlated with the price measure to determine whether to trade in a trend.

The conditions that must be met in case of an increasing trend are:

  • The price measure is higher than the moving average row.
  • The 34-MA line is higher than the 55-MA line.
  • The MA line slopes upwards.

In the case of poor performance, the following conditions must be met:

  • Operating price below the moving average row.
  • The 34-MA line is lower than the 55-MA line.
  • MA line slopes downward

The floating center line becomes a support area during an uptrend and a resistance area against a downtrend. The best place for trend trading strategies is inside and outside this zone.

Below is a daily GBPUSD chart showing 34 exponential moving averages (purple line) and 55 exponential moving averages (red line).

One of the potentially lucrative and lucrative trending strategies is a 4-hour trend tracking strategy that can also be used as a swing trading strategy. This strategy uses a 4-hour base chart to identify potential signal trading sites. The 1-hour chart is used as a signal to determine where the actual site should be opened.

Always remember that the time frame of the signal diagram should be at least an hour lower than the main diagram. For this strategy, two sets of moving averages are chosen for the best results. One is a moving average of 34 periods and the other is a moving average of 55 periods. The MA line must be correlated with the price measure to determine whether to trade in a trend.

The conditions that must be met in case of an increasing trend are:

  • The price measure is higher than the moving average row.
  • The 34-MA line is higher than the 55-MA line.
  • The MA line slopes upwards.

In the case of poor performance, the following conditions must be met:

  • Operating price below the moving average row.
  • The 34-MA line is lower than the 55-MA line.
  • MA line slopes downward

The floating center line becomes a support area during an uptrend and a resistance area against a downtrend. The best place for trend trading strategies is inside and outside this zone.

Below is a daily GBPUSD chart showing 34 exponential moving averages (purple line) and 55 exponential moving averages (red line).

best trading strategies 2021

 

 

5. Counter-Trending trading Strategies

The counter trending strategy is based on the fact that the majority of breakouts do not turn into long-term trends. As a result, traders using these strategies want to take advantage of the pricing trend and the lowest price they have previously set. The paper-based counter trending strategy can be one of the best trading strategies to build trust because of its high success rate.

 


 

 

However, it is important to note that strong leadership is required in terms of risk management. These trading strategies rely on maintaining support and resistance levels. However, if these levels fail, there is a risk of great loss. Regular market monitoring is a good idea. The market conditions best suited for this strategy are stable and volatile. This market environment offers a healthy price range that is limited to a certain range. It is important to note that market conditions may vary from time to time.

For instance, a stable and calm market may begin to tend to remain stable and then become more volatile as the trend develops. It is unclear how the market situation can change. You need to look for evidence of the current situation and make sure it fits your trading style.

 

Find the best trading strategy for you

Over the years, many types of technical indicators have been developed. The great advances in online trading technology have made it easier for people to create their indicators and systems.

It is important to understand that trading is about profit and loss and there is always a risk. In some cases, you may lose more than your original investment in the transaction. There is no simple trading strategy that can get you rich overnight, so don’t rely on bogus headlines promising them. Trading on the market is not a very fast system.

However, with the help of trial and error and a demo trading account, you can learn about the market and yourself and find a suitable style. It can also help you understand the risks of trading before switching to a real account.

 

Conclusion

Mastering your trading strategy takes time, dedication, and due diligence. If you want to learn a new skill, you have to repeat it every day until you master it. The same goes for trading the markets. All of the trading strategies described in this guide have pros and cons. You want to review these to choose the one that suits your trading style.

Before leaving, here’s a quick overview of the different types of trading strategies and how they can help you generate money.

  • A scalping strategy can help you generate fast income.
  • Day trading strategies can help you generate a stable income.
  • Swing trading strategies can serve as a reliable means of income.
  • Position trading strategies can help you increase your wealth in the long run.

We recommend trying the best risk-free daily trading strategy in the demo account before moving to a live account. Don’t hesitate to leave a comment below. We’re happy to read and respond.

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