Trading can be a great way of investing your extra funds to make additional profit – some assets, like dividend stocks, might even bring you passive profit. However, trading isn’t something you should just jump into without preparation. To minimize losses and maximize profit potential, you’ll need to follow a good trading strategy – here are main trading strategies recommended for UK traders.
Before you start: a few ground rules
Let’s stop for a minute and think about the fundamentals of trading before we choose which strategy to follow. First of all, timing is everything. Successful trading requires a lot of time spent on research and following the markets that are of interest to us before even opening a position.
Electronic Forex trading, or EFX, allows traders to comfortably choose their own trading time frame and choose out of a number of trading opportunities, no matter your strategy. Because of the forex market’s liquidity, opening and closing positions is much easier than in most other markets, and there’s less risk of slippage.
The 3 best trading strategies for UK Traders
Trend trading is extremely popular in the UK right now. This strategy relies on performing a technical analysis to predict the direction in which a given market is heading. With trend trading, you can make profits on both long and short positions using CFDs and other leveraged financial instruments.
If you like searching for opportunities, reversal trading might be a good strategy to give a try. In reversal trading, your goal is to find an asset that is going to change direction in the near future. Similar to trend trading, you then ride the trend until the direction changes again – at which time you close your positions and cash in the profits.
Scalping is another popular trading strategy in the UK, which minimizes the risk of potential losses. When scalping, a trader opens many short-term trades with small price fluctuations. We’re not aiming for one big profit here, but instead for many small profits from each trade. This way, even if one trade creates small losses, profits from other trades will cover that.