🗺In the financial market, a strategy is a clearly defined set of rules that a trader follows depending on the specific market situation. Without these rules, you are not a market participant, but just a random passenger.
Today we will discuss the main types of strategies, and in the next publications, we will explore the principles of their implementation using support and resistance levels — some of the simplest, yet most effective tools of technical analysis.
⚖️ Classification of strategies by market movement type, as we established 3 market states and we have two corresponding actions (buy or sell) therefore all strategies are divided into 3 types:
Trending strategies. Our goal is to enter the existing movement and move together with the market until the trend changes or stops. The logic is simple: we buy when the price is confidently rising; we sell when it falls.
Counter-trending strategies. Unlike the previous approach, here we act against the current movement. Our task is to find the turning point: we buy when the asset is actively falling (in search of a bottom); we sell when it is rapidly rising (in search of a peak), or more simply - when it falls we buy, when it rises we sell.
Arbitrage strategies. The goal of such strategies is to capture the price difference (spread) on the same instrument. This can be a derivative or cryptocurrency traded on different platforms simultaneously. We profit from market inefficiencies.
This is just a general understanding of the trading architecture. Each of these strategies has hundreds of variations and can be implemented using a multitude of technical tools.
In the following posts, based on the current market situation, I will make a detailed analysis of each strategy separately.
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