These days, the profession of a trader is getting more attractive, although it’s still covered with mystery. For an average person, a trader is just a lucky boy making big money out of thin air but the truth is that a trader is a representative of a serious profession the success of which solely depends on the trader’s dedication, patience, constant readiness to learn, to say nothing of the capability to weigh risks. If you want to try your hand at trading with EXANTE founded by Anatoly Knyazev, you need to start with working out an effective trading strategy.
Choosing the right trading strategy
A profitable work on the stock exchange is impossible without a clear set of rules. That’s what we call a trading strategy). Making deals at random is a very dangerous approach to stock trading because in this case, you can only end up with an empty deposit. Today, there are hundreds of trading strategies but you don’t need all of them. You can successfully use the most common ones. Let’s consider them in detail in this EXANTE broker review.
Trend trading
The very essence of this trading strategy is that a trend appears to be a friend of yours. The problem is how to determine the current state of the market. Of course, you can easily do it in the past but at the moment it is not so simple to determine the exact state of the market. We recommend using the following methods:
· Work with trading channels: Working on the stock market when the price moves in the channel is an easy way to trade. Keep in mind that a falling market is characterized by consistently lowering highs and lows, while a growing one demonstrates the opposite. The channel is built at least through 3 points (2 minimums and a maximum for a growing market, 2 maximums and a minimum for a falling one). To conclude transactions, you require to catch a rebound from the channel border in the direction of the trend. The price moves almost all the time in the channels. If you are unable to spot it in the current time interval, go to a different time frame;
· Utilize a heavy moving average: If the price is above the line, then the trend is up. If it’s lower, the initiative is taken by bears;
· Use a set of MAs (periods are set differently): In this case, the market condition is determined by the divergence of the used moving averages.
The best option for this trading strategy is to conclude transactions at the end of the correction.
Using graphic patterns
There are two major categories of graphic patterns used in stock trading. The first category indicates the continuation of the current trend, while the other has to do with the reversal of the trend.
The continuation of the trend is signaled by the following elements:
· A flag;
· A pennant;
· A triangle;
· A rectangle;
· A wedge.
The trend is about to reverse if you see the following:
· A head and shoulders;
· A double top or a triple top;
· A diamond.
The given patterns really work, so you can successfully use them when collaborating with the EXANTE broker. Just don’t forget about the following nuances:
· You need to wait for the confirmation that the graphic pattern is formed. For example, when using the head and shoulders pattern, make a deal when the shoulder is broken twice;
· Give preference to signals from higher timeframes. For example, if you get a downward signal on H4, you can ignore signals to open long trading positions on H1;
· To be on the safe side, you need to make sure that the signal to open a trading position according to the pattern is confirmed by other analysis tools, such as technical indicators, for example.
You can work on the stock exchange just relying on graphic patterns and using nothing else but this approach works only on higher timeframes. When working on H1 and below with the EXANTE brokerage company, the influence of price noise is quite noticeable, so in this case, you will require an extended array of analysis tools in addition to the patterns mentioned above.
Countertrend trading
Trading against the current trend is possible but it’s not recommended for dummies since it’s very difficult to determine the moment of the trend reversal. What’s more, in this case, the trader has to work under increased psychological pressure – it’s very difficult to oppose the dominating mood in the market. However, if you have decided to try countertrend trading, you can rely on the following signals:
· A divergence of oscillators;
· A breakdown of the support or resistance line;
· Counter-trend patterns;
· Reversal candle patterns;
· The availability of a strong resistance nearby in a growing market or a strong support in a falling market.
If you attentively use these signals and have enough practice, you will certainly learn how to trade against the trend.
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