As a beginner online trader, one of the biggest questions you will have to have to answer is on a trading strategy. After educating yourself in online trading, the next step is coming up with a working strategy. For many traders, a strategy gradually forms after experimenting on the demo with hundreds of trades. From this, you get to know what kind of trades sit right with your strategy, and that are consistently bringing in profits. Generally, you will find that your preferences fall in one of these types of trading;
This is where you look for gaps in price, and make quick trades to make a profit. These profits are typically low in terms of pips (price change), but these can add up to significant gains at the end of the day. You will need a finance broker who can execute your trades as fast as you place them. Scalping is one way to get experience in reading trends. Visit trusted broker reviews for more information.
Unlike scalping which takes advantage of the frequent highs and lows during the trading day, swing trading involves holding the trade for longer. You wait until the price direction has changed direction firmly and gained momentum. Swing trading has higher gains but you make fewer trades. It is not uncommon to hold a position for a day or several as you wait for the price to move in your favor.
Price action trading
This strategy is usually taken by long term traders but can also work in day trading when the markets are volatile enough for price changes. One popular tactic here is buying at the beginning of the trading day and closing at the end of the day.
Financial markets are very sensitive to events, occurring and occasions that influence economic and political direction. As a news trader, you will closely follow the economic calendar, gauge how the news will affect your instrument, and assess the most appropriate way to place a trade. If you are a forex trader, for example, you will closely follow central bank interest rate changes to see how currency pairs will be affected.
In simple terms, arbitrage is taking advantage of price differences in different markets. This is very popular in cryptocurrency markets because of their decentralized nature. You can, for example, buy Bitcoins in Bitmex and offload them at a higher price in Coindesk for a higher price.
It is not an iron-clad rule that you trade in one way. You can experiment with different types of trade and mix them as you become a better trader.