There are many beginner trading strategies you can test on your trading journey. If you are just starting out, take a look at this list with 4 popular strategies. By learning about the pros and cons of each method, you can avoid common mistakes and get positive results faster.
Day Trading
This trading strategy involves opening several positions and closing them over the course of one day. Day traders focus on short-term deals and never leave any positions open overnight. Here are some of the main pros and cons of the day trading strategy.
| Pros | Cons |
| No fees for keeping positions open overnight (swaps) | You need to keep a close eye on the open trades during the day |
| Potentially less risks associated with long-term trades | Sometimes the price may not significantly change during the day, leading to smaller profits |
| You can trade a variety of assets any time during the day, whenever it suits you | Requires concentration and self-control |
- Don’t limit yourself to price charts and technical tools only: fundamental analysis may also be a good source of trading ideas.
News Trading
Trading the news is another popular beginner trading strategy. News can often be a source of market volatility, forcing prices to fluctuate and creating exciting opportunities.
| Pros | Cons |
| No need to constantly monitor price charts in the traderoom | You need to keep track of important news and react quickly to changing market conditions |
| You don’t have to use technical indicators to look for minor price fluctuations (but they can still come in useful as an addition to your strategy) | Some positions may be subject to swaps (overnight fees) if open for longer periods of time |
| News cycle never ends, so you can look for trading ideas from different sources | The results may not come right away, so patience and self-control are critical |
- Economic calendar is your friend: keep it close to stay on top of major events from the world of finance.
Scalping
Scalping trading strategy is quite straight-forward and suits both experienced traders and beginners. With scalping, the main goal is to catch minor price movements by trading on very short timeframes (minutes or hours).
| Pros | Cons |
| Quick results with short-term trades | Requires fast decision-making: the price movements on short timeframes are subtle, so you need to be very fast and precise |
| Smaller investments | Smaller profits from each trade |
| No overnight fees (most trades are opened and closed within a few hours or even minutes) | Time-consuming: scalpers open and close multiple deals over a short period of time |
- You may use technical analysis tools like indicators and trend lines to identify the best entry and exit points for your trades.
Swing Trading
With this approach traders attempt to catch market swings as the asset price fluctuates back and forth. It is a suitable option for busy traders who don’t like spending a lot of time in the traderoom.
| Pros | Cons |
| Less time monitoring deals in the traderoom, as positions can stay open for days or weeks | Requires thorough technical analysis |
| You can go long or short depending on market conditions | It may take longer to get results |
| May bring higher profits | Overnight fees may apply as positions are open over longer periods of time |
- Keeping a trading journal may help you keep track of your deals and analyze past results. By doing this, you may significantly improve your performance in the future.
What is the Best Trading Strategy for Beginners?
There is no universal trading strategy that would fit everyone. But there are also plenty of different approaches to try out, so all traders can pick the ones that work for them.
To make the right choice, consider your personal preferences and lifestyle. How much time can you spend in the traderoom daily? Do you enjoy technical analysis? Are you an impatient person or a master of self-control? These and other related questions may help you identify a suitable beginner trading strategy. If in doubt, check out this Trading Quiz to find out which trading strategy may fit you best.
That’s it from Santa for now. Have a lovely day and a wonderful holiday season!
