Most Popular Short-Term Trading Strategies that Work

Short-term trading strategies are designed for investors who prefer opening and closing fast positions over a short period, which generally takes weeks, days, or sometimes even shorter timeframes. As a rule, short-term trading strategies are mainly utilized by retail and institutional traders. Its mission is to generate profits from short-term trends and smaller price movements.

We can say that short-term strategies refer to speculative tactics if compared to other common techniques and methods. Today, we are going to discuss simple ways and tips on how to trade short-term as well as some of the most popular short-term trading strategies that work.

Top 3 Time-Tested and Proven Short-Term Trading Strategies

Before we dive deep into our top list, you should keep in mind that short-term trading always involves great risks as well as big profit opportunities. To succeed, one is supposed to stay grounded with all emotions left aside. Whatever happens, stick to a clear trading plan and never invest more than you can afford to lose. Bow, let’s get back to our top list of short-term trading strategies that work.

#1 – Scalping

Scalping refers to the techniques that utilize extreme trading conditions. Investors deal with bigger contracts and larger capital. The main idea is to enter or exit a specific position on the source of the moment. The trade usually takes a couple of seconds. The approach makes it possible to gain significant profits. At the same time, it is associated with even greater risks.

General concept:

The good thing about the strategy, as you will not have to deal with fundamentals at all. This fact definitely puts ease on the process. However, the tactics require much technical analysis implementation as well as focusing on the price action. In other words, you will spend most of the time doing market research and generating crucial insights.

Traded instruments:

As a rule, scalping is used to trade Forex and commodities. The most popular instruments involve WTI and Brent crude oil, EUR/USD and some other trendy currency pairs, etc. The main idea is to use an asset that is likely to make rapid price moves during a day.

#2 – Day Trading

Day trading is one of the most popular techniques that applies to any type of asset. Besides, it can be utilized despite the financial market type. This is what makes it so popular with beginners. Traders generally buy and sell numerous assets throughout a day aiming to close out positions before the market closes down. It means no overnight positions as well as overnight fees.

General concept:

The strategy is somewhere in the middle between scalping and long-term techniques we will discuss a bit further. To get involved, you need to analyze price charts and hourly data. The main idea is to spot declining or emerging trends with the chance of selling or buying a particular asset. If the trend or market takes an unfavorable direction to move, it is time to exit.

If compared to scalping, day trading offers a bit more flexibility in terms of timeframes. Analyzing the previous day's price highs and lows will make it possible to improve the strategy for the current day.

Traded instruments:

The technique is very flexible. It can be applied to any financial market and trading instruments. As a rule, traders use it to trade commodities and currency pairs.

#3 - Swing trading

The swing trading strategy is also somewhere in the middle between short and medium-term techniques. As a rule, swing traders can hold a position for several days or even weeks, which makes the tactics less extreme if compared to other approaches. As the name of the strategy says, the main idea is to spot and analyze the price swing highs and lows to predict the potentially favorable period to buy or sell an asset.

General concept:

To become a swing trader, you need to learn how to predict and plan ahead. Forward-thinking is a crucial skill for the strategy, as you will need to foresee the momentum when and where the price is going to move just before you enter the position. While scalping and day trading rely mostly on technical analysis and ignore fundamentals, swing traders have to deal with both technical and fundamental analysis a lot. This is what makes it not as good for beginners as they may expect.

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Baseline Short-Term Trading Tips

If you plan to get involved in short-term trading, you will need not only some of the above-mentioned strategies but also the following tips to get started:

1. Open a live account.
2. Get a $30 Welcome Bonus as a new trader.
3. Select a preferable trading instrument.
4. Try out and test several short-term strategies to decide on the best-matching one. To make your testing as risk-free as possible, you’d better test different techniques in a demo account.
5. Revise trading basics and fundamentals. Brush up your technical analysis skills and knowledge.
6. Develop risk-management tools and apply them to avoid huge losses.

This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.