Stock Trading Strategies That Actually Work

There are thousands of different strategies that stock traders use every day. These strategies were tried and tested by professionals, this is why they are called “strategies” rather than just trading styles. The important thing is that each strategy always has a key point it focuses on or relies on. This can be the flow of information such as a specific feature on the chart that indicates future or past performance, or maybe even just strategies relying on other people’s trading habits.

Let’s suppose you have to go to your friend’s house outside of the city. You do not just press the gas and go, right? You first find out where the house is, which road leads to it, are there any alternative routes that are better? How long will it take to get there? Should you bring a GPS? All of these things are pretty similar to trading stocks. 

While trading in the stock market, your end goal is generating income, much like the end goal with the friend scenario is getting to his house. You research the best possible companies that you can trade in order to gain as much payout as possible (similar to checking the routes). You then research what are the best ways to approach these stocks (like checking for alternative routes if they are faster), and then finally placing your trades (actually going to the house). 

Therefore, choosing the best stock strategies plays an enormous role in your overall success in the end. 
In this article, we will take a look at 4 stock trading strategies that have been proven to work flawlessly. 

News Trading Stocks

One of the most important trading strategies is News trading. News trading is pretty easy to understand. The trader just has to sit tight and wait for very very important news to come out about a specific company. Usually, the way people do this is to sign up on the newsletter of these companies, so that they receive news exclusively, or just sign up for signals from their brokers. So every time an article is published with the company’s name mentioned, the trader is notified. 
 
When news comes out, clearly it has an impact on the financial markets that can be good or bad. If the stock market is going up and the positive news comes out, the market will carry on going up as the news is confirming the market trend. On the other hand, if negative news comes out the stock market will go down. 

Besides, another thing that should also be noted here is that during the news releases and updates, the market becomes extremely volatile. This means that the prices of the stocks start to move very quickly and things might change in a very short period of time. This is why trading at this sensitive time is often considered to be one of the riskiest times.

News trading is a fully documented working strategy for the stock market that has been tried and tested by thousands of traders. It’s also the least brain-heavy so to say. Very little technical analysis is required for this strategy. You see the news, and based on your experience with the company, you can immediately say what could happen to the price, regardless of what the news is about.
 

Swing Trading Strategy

Another trading strategy that needs to be taken into consideration is Swing trading. This is a style of trading that consists of holding a trade longer than day trading but not as long as a long-term investment. A typical swing trader will hold a trade for somewhere between two days and two weeks. In most cases, swing traders use technical analysis but sometimes they add fundamental analysis to that to make high probability trades and accurate trading decisions. 

Generally, traders use candlestick charts as an indicator of price direction in order to make accurate swing trading decisions. But they do not use only candlestick charts, they also combine them with other important technical analysis tools to help the traders make high probability decisions. Things like moving averages, indicators, structure support and resistance, candlestick patterns, price action patterns, and so on.

One of the working strategies for stock trading when it comes to swing trading is trading with the trend. Sometimes traders use an exponential moving average. Besides, staying consistent while swing trading is also another important and beneficial attitude creating rules that the traders can follow every time they place a trade is how they will be able to stay consistent with their trading plan into their strategy.

As we can clearly see, swing trading is not a very complex trading strategy, it just requires the investors to have an overall understanding of the basic concepts of this market and how the stock market works in general.
 

Scalping

Scalping is one of the tried and tested strategies that work for stock trading. It consists of opening and closing the trades in the stock market in a very short period. Mainly this happens because people want to generate a lot of money in the shortest time possible. Scalpers are pretty much vultures. They do not plan for large movements or anything like that. The moment they see that there is an opportunity for gains, even if that payout is like $0.0001 they are ready to take it. They tend to open and close trades in like 5 minutes. 

One of the first things a new trader should understand is how stocks range and how you can potentially profit from them. You're talking about range breakouts in general when it comes to scalping. Understanding where potential breakouts might happen is very important in this strategy. 

Looking for the range breaks is the single easiest way for new traders to pick up scalping in general and getting into the habit of documenting the highs and lows of specific ranges whether it is daily or five-minute ranges. Understanding these ranges can be an incredibly helpful and beneficial thing for not only new traders but for professional traders as well.
 

Day Trading

Another trading strategy that should be mentioned while we talk about stock investing strategies that work is day trading. Day trading is pretty similar to scalping. The only difference is that instead of closing trades in 5 minutes, day traders close their trades during the same trading day. So for example, if the markets open at 9 AM, you open a trade and then close it at 4 PM right before the markets close.
 
The core idea behind day trading is that it is a pullback trading strategy. First of all, it should be noted that in the long run, the traders usually know that the market is in an uptrend. This is because the stock market tracks what the global economy is doing.
On the other hand, in the short-run period of time, there is fear in the market performance and the prices could go below their true valuation. This is when most of the traders take advantage of this working strategy for stocks. The reason for this is that short-run trading leads traders to more profitable trading opportunities. A lot of professional traders say that starting day trading strategy is a good option especially when the overall market is in an uptrend. 
 
Although day trading is one of the stock trading strategies that work, it’s illegal in the United States. The only way to day trade in the US is to have a $25,000 capital at the start and end of a trading day. If you don’t, then expect to see some fines coming your way.