Investment strategies are approaches to invest money. Each investor has to develop own plan to make use of financial instruments in order to eventually receive a decent profit. Having a strategy allows you to make more informed and balanced trading decisions. This helps to properly build a financial portfolio, which may include cash, stocks, bonds and other securities. This section offers several choices for strategies, and each potential investor can pick the most suitable kind of strategy.
Types of investment strategies
Several behaviour lines are considered the most popular among people committed in investments.
These include the following:
- Conservative investment strategy
- It is suitable for investors who do not want to take lots of risks, want to preserve the initial investment amount and get an attractive income.
- Moderate investment strategy
- In this case, we are talking about greater risk compared to the previous option, but incomes are growing accordingly.
- Aggressive investment strategy
- The investor takes the maximum risk in the hope that he will get an exceptionally great profit.
Those approaches above describe only the general features of the lines of investment method or risk appetite. Short-term and long-term investment strategies are also related to this section. Descriptions of alternative strategies can be also found on the website.
The Aroon Indicator is a technical instrument used to measure the trend’s strength and identify the direction of the price change. The indicator consists of two lines ranging from 0 to 100.
Momentum Trading indicators is based on the idea that if the previous change of the price had enough strength behind it, then the likelihood of the trend to continue in the same direction would rise.
Fractal Trading is a popular method of identifying reversals on the price chart. Forex traders should have noticed that prices do not reverse suddenly. In most cases, the chart draws a U-shaped formation when the downtrend is getting exhausted and the bulls take the market under control.
Among a wide variety of chart formations, Flag Pattern is one of the most widely used in the technical analysis. A Flag Pattern has two components. The flagpole usually has a short-term spike of an asset price which looks like a stick on the chart.
That feature is used in a Mean Reversion Strategy - a system based on defining average price ranges. This article is aimed to explain how that trading method works, what are the best steps to arrange it in terms of profitable Forex trading and which technical indicators are worth considering to build an effective trading algorithm.
If a candlestick chart looks like a cross, or a plus sign or an inverted cross, it is called Doji. Doji means a miss or an error in Japanese and rice traders used that sign as an effective tool to predict possible saturation of the markets in terms of upside or downside potential.
Shooting Star candle is one of the most widely used single candles chart setups to determine a bearish reversal. In case if an uptrend is followed by a candlestick chart with a long upper shadow and small body with a close rate near the open, the technical analysis points to a possible change in the market sentiment.
Technically, the Ascending Triangle Pattern is a bullish continuation setup, which points to a strong resistance level and a high likelihood of the bullish breakout. When the bulls are losing momentum to keep pushing the asset price higher, the uptrend pace is getting exhausted.
The Algorithmic Trading is an automated system where computers make trading decisions based on algebraic equations describing the price action with numbers and formulas.
Grid trading strategy is based on a long-term perspective. Before considering the system, traders should determine the long-term trend’s direction first, assess the potential depth and distance of the trend and make sure that the fundamental and technical backgrounds confirm each other.
How to choose an investment strategy?
The selection of a suitable strategy has to be carried out based on pre-set goals and targets. The wide variety of opportunities and offers in the market might scare a beginner trader. In this section, you can easily choose the tactics that will help you make sufficient profits. All aspects are accompanied by detailed descriptions, the investor can easily find out what is investing in stocks and which types of investment strategies are better to implement.