Here’s an overview of key trading techniques used in financial markets, suitable for beginners through advanced traders:
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1. Technical Analysis (TA)
Focuses on price charts and indicators to predict market movements.
Chart patterns: Head & Shoulders, Double Top/Bottom, Flags.
Indicators: Moving Averages, RSI, MACD, Bollinger Bands.
Candlestick patterns: Doji, Hammer, Engulfing.
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2. Fundamental Analysis (FA)
Based on the intrinsic value of an asset.
Stocks: Analyze earnings, P/E ratio, revenue, management, sector trends.
Forex/Commodities: Monitor interest rates, economic indicators, geopolitics.
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3. Quantitative Trading
Relies on mathematical models and algorithms.
Backtesting historical data.
Factor investing.
High-frequency trading (HFT).
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4. Sentiment Analysis
Uses market psychology and news to guide trades.
Social media sentiment.
News headlines.
Fear & Greed Index.
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5. Swing Trading
Hold positions for days to weeks.
Use both TA and FA.
Seek to profit from short-term trends.
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6. Day Trading
All positions closed before market close.
Focus on high liquidity and volatility.
Use Level II quotes, real-time news.
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7. Scalping
Extremely short-term trades (seconds to minutes).
Very tight risk management.
High-frequency trades for small profits.
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8. Position Trading
Long-term trend following.
Trades can last weeks to months.
Uses macroeconomic trends and long-term charts.
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9. Risk Management
Stop-loss / Take-profit levels.
Position sizing: Don’t risk more than 1-2% of capital per trade.
Diversification across sectors or asset classes.
