If you are interested in online trading or investing, you should ideally choose one of the best options in 2023, which then takes over the role of the intermediary, as access to the securities market must be established. Next, through the broker, you can work with various assets for the best investing – so there is Stock trading, but also the possibility to earn money with commodities, bonds or precious metals. If one is still in the phase where one wants to learn online trading, it is important to choose a broker that offers trading for beginners. Because, of course, there are differences in online trading: Someone who has been active in the securities market for years will have different ideas about it than someone who just wants to learn online trading or is a very young beginner.
Investing means working with different assets – so it is about trading stocks online or speculating the price of certain bonds, precious metals or commodities. It is important to learn about the different strategies in advance – especially if you are just learning online trading. Because the best trading platform does not help if you work with long-term investments that do not bring the desired success with it.
Investment Strategies to Learn Before Trading
When only starting, investing strategies are essential. A lot of traders follow them after big losses, so to prevent it, let’s take a closer look at some strategies to learn before trading with real money.
Support and Resistance
The following investing strategy is called “Support & Resistance”. In the market, you can always recognize certain price marks at which the price turns several times. This is a sign that the supply or demand at a certain price is particularly predominant.
Highs and lows in the market are the most important price points for a trader. When a high or low is formed, it can be assumed that the price is overvalued or undervalued. Consequently, the next market movement occurs. If the market reaches this point again one can look for a direct entry or wait for a confirmation. An entry is safer at the 3rd test of the point in the market.
Strategy Facts:
- Support and resistance lines are drawn at highs and lows investing rates
- The lines rarely hold to the tick, therefore price ranges can also be drawn in
- After the 1st try, entries are theoretically possible directly
- After confirmation of the high, the 3rd try is very meaningful
This strategy works especially well in sideways phases. At the outer end of the sideways phase, we look for an entry. Skilled traders can look for a trade opportunity on the first test of a high. However, this is also riskier in our experience.
Fibonacci retracement
The Fibonacci tool is particularly well suited for investing when trading pullbacks into an existing trend. This tool/indicator is available in any popular trading platform for traders and can be plotted in just a few clicks. The tool must be drawn from the high point to the low point of a past movement. After that, reset marks will be displayed. Important % marks of the movement are displayed.
Fibonacci trading can be applied in any time frame. In the time frame D1 (daily chart) I have the best results with this strategy. The smaller time frames are suitable for a more precise entry with smaller risks, making it the perfect strategy for investing.
Prerequisite and application:
- A large movement or trend must have taken place
- The tool must be drawn from the starting point to the endpoint of the movement
- Look for entries and confirmations at the % lines
Missed a trend? – No problem, wait for resets using the Fibonacci – one of the best investing tools. Besides resets, this tool can also be used for targets of a trend. Reset points and targets are plotted automatically. As with the first trading strategy, watch for specific confirmation signals at the marks for a good trade.
Automatic Trading Strategy for Forex & CFDs
The next investing strategy will save you a lot of work and is especially interesting for beginners. Through a good visualisation of the chart, you can directly recognize important marks in the chart. The drawing of correct support and resistance lines in the market is not always easy. This strategy does this completely automatically for you!
This strategy works for scalping as well as for long-term investments. It depends here on your desired trading style. The indicator automatically draws you to important support and resistance levels. A label also shows you the properties of the level.
Properties of the strategy:
- Works only in MetaTrader 4
- Automatically draws in important marks in the market
- Works in any time frame
- Automatic alarms can be turned on
This strategy works in conjunction with Metatrader 4. The files must be downloaded to the computer and then inserted into MetaTrader 4. After that, the trading software must be restarted. You insert the strategy very easily with a template. It can be duplicated on any chart.
What Is the Best Investment Strategy?
What is a trading strategy anyway? It is a concrete concept of investing in financial products. You submit yourself to a prefabricated idea, which other investors have already used with success long before you. Successful trading strategies differ in their complexity and even in the type of financial vehicles allowed. Before we get into the specific investment concepts, let’s take a brief look at for whom a trading strategy is suitable and for whom it is not.
Momentum Trading: Jump on the moving train
The trading strategy for investing called Momentum is probably the easiest and best to learn. This is because it involves jumping on an existing trend development. The theory is that an asset that is currently rising will probably continue to do so for some time. Momentum traders try to find the middle of a trend. Then they can be sure about the buy signals. Nevertheless, they do not want to hold the investment for a very long time. The herd instinct of the speculators is exploited.
Many investors drive the price up. And we want to profit from this development with the Momentum Strategy. Stocks are suitable for this tactic. However, since currency markets are open 24 hours a day, they are even more in demand. The Moving Average and the Relative Strength Index are used as indicators. These indicators are applied either to longer-term chart developments or even to the daily chart. The aim is to capture the short- to medium-term development horizon of an investment and to jump on the moving train over the foreseeable future (via contracts for difference on rising or falling prices).
Popular Investment Strategies For Beginners
A brief piece of wisdom to start with: being invested is better than not being invested. However, some investment tactics involve greater risk. Therefore, beginners should rather orientate themselves on classical investing or apply simple strategies.
Shares and other investment products are volatile. This is true not only over a longer period of time, but also in relation to a short time window. Let’s take stock as an example. It usually describes one or more arcs – swings – in the course of time. Within the swing trading strategy, the goal is to invest at the bottom and sell at the top. This is also what investors with a longer investment horizon try to do. However, in swing trading and this is also revealed by current Vivid experiences, the security is held for a few days at best. All these features make it one of the safest strategies for beginners.
Again, it is foreign exchange and stocks (also in the form of CFDs) where the scalping investing strategy is used. But what is actually to be “scalped” here. In fact, it is only about scalping the movement of the investment vehicle after an incredibly short time. The investment horizon, also called holding period, is incredibly short. Professionals often hold their investment for only a few seconds. At the longest, the investment is held for a few minutes. This tremendously short-term strategy is therefore also suitable for working people (before starting work, during a break or after work).
The last but not least in our list of strategies for beginners is Ichimoku. It is a rather less known indicator for investing in the UK. Here, investors more often use the RSI, MACD or Stochastic. Perhaps the Bollinger Bands, Fibonacci Retracements or ATR are still used. That Ichimoku Kinko-hyo has its origin in Asia is already obvious from the phonetic sound. It is a rather complex analysis to make graphically. First of all, though, you shouldn’t be confused by the Japanese origin. Also the candlesticks (candles) in the technical analysis originate from there.
Principles of Investment Strategies
Many beginners wonder if you can use these investing strategies universally. Our answer to that is “Yes, you can”. A successful trading strategy should work in any time unit and with any software. Also, the strategy should be adaptable to specific markets. The methods presented are universally applicable and can be improved even if desired.
Facts about trading strategies:
- Applicable best in the trading platform MetaTrader 4
- Applicable in any time unit (short-term and long term)
- Applicable in any market investing
- Suitable for beginners and professionals
- Easy to understand and high hit rate
- Understanding of candlestick analysis is required
- Test the trading strategies first in a demo account
We recommend testing the presented trading strategies in a demo account first before the regular investments. Every trader needs experience and practice to execute a method perfectly. The demo account is a trading account with virtual funds. It simulates real money trading and the trader can thus trade without risk.
Conclusion
Hopefully you have found an investing strategy in our overview that is suitable for you. However, if you have not yet invested money in the capital market, we advise you to use an ETF or fund first . Alternatively, you can invest a part of your monthly or annual surplus in an index fund and use another part for testing your trading strategy.
Nevertheless, most active money investing strategies are based on relatively short time units between buying and selling. Seasonal trading and position trading are somewhat exempt from this. Here, positions are held for at least weeks, often longer. One more thing to conclude: No master trader has yet fallen from the sky. All beginnings are difficult. Losses cannot always be avoided in your investments. However, it is important that you stay in the profit zone in the long run. However, many investors must first gain experience with the optimal trading strategy on the way there.
F.A.Q.
The best strategy is a subjective matter, as it hinges on individual circumstances, risk tolerance, and financial goals. Diversification is a cornerstone of any prudent approach, spreading investments across various assets, such as stocks, bonds, real estate, and commodities, to reduce overall risk. Long-term investing is often favoured, harnessing the power of compounding returns. Passive strategies like index funds offer cost-effective exposure to the broader market. On the other hand, active investors may seek alpha by carefully analysing individual securities. The optimal strategy should be aligned with specific goals, considering factors like time horizon and liquidity needs. Professional financial advice can help tailor an investment plan that suits one’s unique situation.
Setting up a strategy involves several key steps. First, define your financial objectives clearly, whether it’s saving for retirement, buying a home, or funding education. Assess your risk tolerance to determine how much volatility you can handle. Consider your time horizon, as longer-term goals may allow for more aggressive investments. Diversify your portfolio across different asset classes to spread risk. Decide whether you want to take a hands-on approach (active trading) or use a more passive strategy, such as investing in index funds or ETFs. Regularly contribute to your investments and review your strategy periodically to ensure it remains aligned with your goals and financial situation. Seek advice from a qualified financial advisor to create a personalised strategy.
For beginners looking to invest in stocks, education is essential. Familiarise yourself with the stock market, different investment types, and the basics of fundamental and technical analysis. Open a brokerage account with a reputable firm that offers user-friendly platforms and low fees. Consider starting with low-cost index funds or ETFs, which provide diversified exposure to the market. Avoid investing money needed for essential expenses, and instead, use funds you can afford to set aside for the long term. Dollar-cost averaging is a useful strategy for beginners, spending a fixed amount regularly to reduce the impact of market volatility. Remember that investing in stocks carries risk, and a long-term perspective is vital for success.
The best strategy to invest money varies based on individual goals, risk tolerance, and investment horizon. Diversification is a fundamental principle, spreading investments across different assets and industries to mitigate risk. Asset allocation, determining the proportion of assets in the portfolio, is crucial in balancing risk and potential returns. Long-term investing is often favoured, allowing investments to grow and ride out market fluctuations. Minimising fees and expenses is essential to enhance overall returns. Dollar-cost averaging helps smooth out the impact of market volatility by investing a fixed amount regularly. Regularly review and rebalance your investment portfolio to ensure alignment with changing goals and market conditions. Ultimately, the best strategy is one that aligns with your financial objectives and is backed by thorough research or advice from a qualified financial professional.
There are various strategy examples, each with its unique approach and objectives:
– Buy and Hold: Investors buy assets and hold them for an extended period, expecting long-term growth and capital appreciation.
– Value Investing: This strategy involves identifying undervalued assets using fundamental analysis, aiming to capitalise on their potential price increase over time.
– Growth Investing: Investors focus on companies with high growth potential, even if their current valuations seem relatively high, anticipating greater returns in the future.
– Dividend Investing: Investors seek out stocks or funds that regularly pay dividends, providing a steady income stream alongside potential capital gains.
– Index Investing: This passive strategy involves index funds or ETFs to track the performance of a specific market index, offering diversification and lower costs.
– Momentum Investing: This strategy involves selecting assets that have shown recent strong performance, with the expectation that the trend will continue.
Remember that no single strategy guarantees success, and each comes with its level of risk and reward. Tailor your investment approach based on your financial goals, risk tolerance, and time horizon. Seeking advice from financial professionals can also help craft a well-rounded and effective investment strategy.