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.
It often happens that an asset price is getting overbought or oversold, an oscillator shows an attractive signal to enter, but the price action goes in the same direction. As a result, a false trading signal from a trusted indicator, which used to bring lots of profits previously, causes losses instead of profits. How to avoid such a situation? What are the key parameters to find market traps and identify false signals from technical indicators? This trading system is aimed to answer those questions.
Most of the trading system based on technical indicators have reliable entry signals but they do not show the perfect moment to exit the market, whether a position is in the money or traders should cut losses in time. The main reason for such an incomplete work of trading algorithms is related to the lagging nature of technical indicators as they all are based on mathematical formulas taking into the account past price action but not future market’s intentions. Some technical analysts use a combination of several tools to get the right answers, however, since the financial markets change trading conditions rapidly, it’s tough to find a mix of indicators with leading nature. Nonetheless, several systems work effectively.
MACD Pullback Trading System is based on swing trading technique as it is based on medium-term trends, while short-term fluctuations are ignored.
Triangle pattern appears when support and resistance lines of a price action create some sort of shape similar to a triangle. Most of the trading triangles are rectangular meaning that whether resistance or support lines are Symmetrical triangles.
Breakout trading systems are traditionally vulnerable to higher risk levels than strategies following a long-term trend. On the other hand, potential profits pay off the risk as if a resistance/support breached, quotes might keep moving in the same direction for quite a while, allowing traders to hold profitable positions longer than usual. Sometimes breakouts happen with an initial false break of the opposite level.
Awesome Oscillator and MACD Forex Trading System use a combination of different timeframes to assess the trend’s momentum, compare divergences happening when the price is vulnerable to reversal, and conclude the movement direction for the nearest term.
Some trading strategies aim to catch strong trends, even though they ignore short-term insignificant price fluctuations. An average trade duration is usually in a range between 5 and 10 working days, or 1-2 weeks.
Short-term trading systems are popular among retail traders with comparatively low equity. However, the latest data shows that large investment banks and financial institutions use those types of algorithms for intraday trading.
One of the most effective and reliable technical tools is moving average as it shows several factors with one simple curve. Traders can assess how far the current price went off the average rate, what is the current trend direction. It’s understood that if prices stay well below the moving average for quite a while, then the downtrend dominates in the price action. At the same time, using moving average in different combinations of periods is also helpful when it’s needed to compare long-term trends with short-term price action. If several timeframes confirm each other, then the likelihood of one-way movement is high.
Magic Breakout System has a different nature. Some are temporary, some are sustainable and continuous with several stages of healthy retracements and corrections.
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.