Easiest Trades to Learn: Trading Tutorial From our Expert
In the world of financial markets, there are so many strategies and methods to implement in your trade career to increase profits. But what are the easiest trades to learn for beginner traders? Here are some ideas and explanations of each of these strategies.
Easiest Trades to Learn – What Are the Easiest Trades to Learn
Here are the best strategies for beginner traders that are very effective and can bring you decent profit if you grasp them as much as possible.
Easiest Trades to Learn – Trend Trading Strategy
A trend-following trading strategy is one of the easiest trades to learn and one of the most popular choices among Forex traders.
Trendlines let you focus on price movement while keeping your charts free of messy indicators that look like a 5-year-old’s painting.
Remember that trend lines are not the holy grail when developing a Forex trading strategy. It is simply a tool to help you identify trends and make smart risk management decisions when the market indicates a change.
Easiest Trades to Learn – how To Use Trendlines: Breakout and Reversal Strategies
With the Auto Trendline indicator helping to effectively identify and draw lines on your charts, let’s see how to use trendlines in your trading activity.
Like all trading strategies that employ support and resistance lines, effective trendline trading can be classified into two categories:
Breakouts: Price no longer respects the trendline and breaks through support or resistance.
Reversals: Price follows the trendline bouncing off its support or resistance.
Easiest trades to learn – Range trading strategy
The range trading strategy has become more and more popular lately.
Range trading is a forex trading strategy that identifies overbought and oversold currencies, i.e., buying during periods of support/oversold and selling during periods of resistance/overbought. This is one of the easiest trades to learn and a type of strategy that can be implemented almost any time. However, it is best used when the market has no distinct direction. It is most effective when the Forex exchange market has no real long-term trend insight.
What is Range Trading exactly?
Range trading is a strategic approach in active investing, involving the identification of a specific price range within which the investor conducts buying and selling activities over a short period.
For instance, if a stock is currently priced at $55, with an anticipation of reaching $65 before fluctuating within the range of $55 to $65 over the following weeks.
Traders engage in this strategy by purchasing the stock at $55 and selling it when it reaches $65. This process is repeated until the trader determines that the stock will no longer trade within the identified range.
Range trading requires a nuanced understanding of market dynamics and may benefit from specialized training programs, particularly for skilled trades like air conditioning technicians, where job training plays a vital role in mastering the trade jobs associated with this specialized field.
Easiest Trades to Learn – Breakout Trading Strategy
What Is the Breakout?
If we look up the word “Breakout” in the dictionary, we find it synonymous with “burst,” indicating a sudden rupture or breakthrough. But what exactly is breaking out? We’ll explore various breakouts shortly.
Notably, a breakout is significant because it often precedes a substantial price movement. Interestingly, a strategy centered on breakouts doesn’t rely on indicators; rather, it demands the ability to recognize them on the chart. Now, let’s delve into recognizing breakouts and their implications.
This skill may be cultivated through specialized training programs, such as those offered at trade schools, particularly for aspiring trade workers seeking to enhance their market analysis skills.
Types of Breakouts
Outputs of technical figures. In the case of technical figures, the breakout represents the figure’s exit and, therefore, the price release. It can be one of the trend lines that framed the pattern or the breakout of a neckline.
- Breakouts of support or resistance: A title that has broken free and is above all heights has nothing to stop it. But to do this, it is necessary to identify these important levels.
- Trend line breaks: The breakouts that I look for the most are because they are easy to recognize and offer great opportunities!
In our opinion, a good breakout must be obvious! The longer and tighter the correction period, the more powerful the explosion after the breakout will be. This rule is not based on anything concrete, but experience has shown that it is rather true!
A huge advantage of trading breakouts is that you will also be one step ahead of indicators that are always a little behind.
Easiest Trades to Learn – Momentum Trading Strategy
Who hasn’t fantasized about consistently outperforming the market? It’s logical to assume that any discrepancies leading to superior returns in financial markets would be swiftly identified and rectified. However, reality often diverges from this expectation.
The Momentum phenomenon, extensively documented by researchers like Titman in 1993 across twenty countries, serves as a compelling example. But does leveraging this strategy provide a fail-safe solution?
This question echoes within the realms of high school and vocational schools, particularly for aspiring HVAC technicians seeking to navigate the complexities of market dynamics alongside their specialized training.
Understanding the Momentum Effect
Not to be confused with trend following (the tendency for markets to move in a given direction), the momentum effect is the tendency for stocks to persist in their performance: stocks that have performed well past performance tend to outperform other stocks over the next period.
Similarly, stocks with poor returns will tend to maintain their underperformance over the following period.
The Momentum strategy, which exploits this anomaly and consists of buying stocks that have outperformed over a recent period (generally six months or one year) and selling those that have underperformed, is particularly effective.
Benefits and Risks
The Momentum effect, and the resulting strategy, are intimately linked to overconfidence behaviors characterized by self-attribution or individualism. Investors seeking to maximize their return in the event of a rise in prices place less and less importance on the fundamental characteristics.
It is clear that this strategy is effective. According to a study carried out by Titman in the United States over the period 1965-1989, the strategy’s annual return (adjusted for risk) is 12.83%.
This is not without risk: from time to time, the trend is reversed. Momentum strategies turn around and degrade the return expectation in the medium term.
Similarly, such behavior can be the source of irrational, self-sustaining price increases and, in the worst case, the origin of a bubble. At the risk of disappointment, it is impossible to beat the market continuously. This is neither rational nor conceivable.
The Momentum strategy is also the subject of much criticism. One of the solutions proposed to improve the strategy would be not to obscure the fundamental aspect completely.
Easiest Trades to Learn – News Trading Strategy
Here is one of the easiest trades to learn in today’s financial markets.
There are four main strategies for news trading, the specifics of which we will explain to you below:
Trading Initial Reactions
We are waiting for the publication of the stats. Depending on the current figures, one enters the market or not if the deviation is large enough.
We then try to capture the maximum of the first initial reaction movement (40-50 pips). We place a stop 15 pips from the last pre-release sub.
Trading Retracements
We are waiting for the publication of the stat, and we are waiting for the maximum point of the initial peak. We then wait for a retracement of 10-15 pips (sometimes more with the big impacts) to position ourselves if the deviation confirms the trade.
It will be necessary to place a stop loss at approximately 15 pips from the entry point of the trade.This type of news trading is easier and less risky, but sometimes there is no retracement or no sufficient retracement.
Pre-News Trading
This is to take advantage of a possible “boost” that a stat would offer to an ongoing technical trend.
It is, therefore, necessary first to define the current technical trend. Then, you have to enter the position 5 minutes before the publication of the statistic, in the direction of the current technical trend.
Suppose the statistic goes in the current trend direction and the deviation is enough. In that case, the previously current trend should accelerate.
If the stat goes against the trend, you will have to experience the initial counter move. Still, the technical trend will generally resume (if strong enough) within 2-12 hours after the initial peak (or trough).
Attention! Do not practice pre-news trading with just any stats! Some statistics, like the NFP, are so important that they may warrant technical trend reversals if the deviation is large. In this case, the pre-news trading strategy is invalid.
Trading Market Sentiment
Market sentiment is arguably the most complicated news trading method. It’s basically riding the market sentiment generated by fundamental news in general, not trading any particular news in the short term.
In fact, it’s not even really news trading. We trade here more the anticipation of the news than its impact.
But it’s not as easy to learn as profiting from short-term news. It takes experience. Here we’ll just provide you with some basic rules and principles that you can rely on to build your own experience.
Easiest trades to learn – Carry trade strategy
The carry trade (carrying strategy) is one of the oldest and easiest trades to learn on the foreign exchange market, long before the floating exchange system. So, this is an arbitrage strategy that consists of taking advantage of the interest rate differential between two currencies.
The basic operation of the carry trade consists of borrowing a currency with a low-interest rate to place the borrowed sum in a currency with a higher interest rate.
The holder of this strategy will therefore collect the interest rate differential applied to the amount borrowed between the borrowed currency (the “funding” currency) and the investment currency (the “carry” currency).
Profitability of the carry trade
The interest rate specific to each currency is linked to the interest rate charged by the country’s central bank. Naturally, you will not apply the key rate. Still, you must take into account the overnight rate of the money market, itself directly under the influence of the central bank’s key rate.
Once the carry trade operation has been initiated, you earn the difference between the interest rates of the two currencies in question each evening. Your Forex broker will be responsible for passing on the credit interest or the debit interest to your Forex account’s balance.
It would be best to keep in mind that for the interest to be credited, the rates at which you borrow currency A) must be lower than the rate received (the rate at which currency B is placed).
Bottom line
Discovering the easiest trades to learn is vital for beginner traders aiming to boost profitability. From trend trading to breakout strategies, a range of approaches offers potential returns.
Range trading identifies overbought and oversold currencies, while momentum trading unlocks opportunities for consistent outperformance.
News trading strategies and the carry trade strategy provide further avenues for capitalizing on market movements. Aspiring traders, including those in high school or vocational schools, can leverage specialized training programs to navigate these strategies effectively and capitalize on market opportunities.
