Online trading has proliferated in recent years and attracted many investors who have been dazzled by the high rates of return obtained by many traders following the appropriate trading strategies. All traders are profiting from price changes, buying low and selling high, or short selling and covering low. When you start to negotiate there is a fundamental question, do I analyse the trend or the range?
The analysis of the trend or range are strategies that have brought good results to all users. The implementation of either requires a totally different mind-set and a totally different money management strategy.
The Trend Trader, looks for the point where a trend is reversing. Than will seeks to liquidate following the position before the end of the trend or as soon as the trend starts to change direction. So the trend traders will have to wait another reversal in prices in order to to invest again, observing carefully and using useful indicators for technical analysis. As soon as the trend is identified, the trader will have to confirm the trend that wants to undertake before open a position. After confirming, the decision to open a long or short position is established depending on the direction taken by the trend, requiring to liquidate the position at certain levels of profit and risk. During periods of high volatility, traders trend generally adopt a strategy that will lead them to reduce the size of the open operations.
Traders who study the range, in contrast to the trend traders, will always look for established markets, negotiating only within certain price ranges. Traders trading with range strategies will always start with not very large investments, then traders will add more money to that position only if they see a better rate. This type of trading, however, could result in the requirement to have large amounts of capital, but given the benefits of online trading and in particular the leverage that allows you to open positions higher than the money invested, this problem does not arise so much.
Both styles of trading are very effective, and one does not exclude the other. One thing in common between these two strategies concerns the definition of a trading plan very serious and precise that allows you to operate a perfect strategy. In fact, like any business it is important to use the right strategies to achieve success, so it is important that everyone will be able to plan the trading.