6 Trading Strategies: From Day Trading to Swing Trading

When we think of trading, most investors think of buying and selling shares at very rapid intervals. But professional traders, who spend their whole day doing nothing else, prove us wrong: Trading is more than just speculating. To really make a living out of it, you need some strategies and a certain amount of know-how.

The right strategy is also extremely important in CFD trading. The right CFD strategy can reduce losses and make trading more profitable. Below we give you 6 tactics that will give you all the information you need from swing trading to day trading.

Discretionary trading

Discretionary trading is not so much a trading strategy as a trading method and describes decision making based on personal intuition instead of following a rigid set of trading rules. But beware: only experienced traders should use this method, because it requires many years of experience to be able to rely on your "gut feeling".

In order to develop a feeling for the market and the market participants and to base your trading decisions on it, you have to know it well. At this point we would also like to note that intuitive decisions cannot replace a trading strategy, especially if you are a trading beginner. As a beginner, try a few small trading decisions based on your gut feeling to get a feel for the different market situations.

As mentioned above, discretionary trading is used mainly by experienced traders. It complements day trading as well as swing trading. A particularly good nose can significantly increase the return, which is why this method is also something for people who otherwise rarely move on the trading floor, but have a good understanding of the market. For pure beginners, however, discretionary trading could lead to losses, not least because they lack the necessary experience.

Swing Trading Strategy

This is one of the most popular trading strategies. It aims to generate profits from the large movements in the market, holding open positions for more than one day, in stark contrast to day trading. As a result, swing trading takes less time as there is less administration involved.

In swing trading, you assume that the market is oriented to certain trends. The advantage of this is that depending on the trend, it can be relatively strong and also long-term. 

This is based on the fundamental assumption that markets move in waves. If you assume such an alternating movement, you can invest in both directions, especially in CFD trading. You either buy long certificates or CFDs, on the basis of which you bet on the upward trend, or you invest in short certificates or CFDs and thus go along with the downward trend.

In addition to CFD trading, the stock market itself is also suitable for the application of the swing strategy, albeit with limitations, because, not like CFDs, mostly you can only bet on rising prices, so go long. Short trading on the stock market is only possible with the help of so-called "short sales". 

Day trading strategy

Most people associate trading with classic day trading. Here, the open positions are held for only a few hours, in rare cases overnight. Day trading aims to make optimal use of the daily micro fluctuations in the market.

Quite a few traders use day trading as an important component of their investment strategy. They monitor the markets and trend movements very intensively and use more than 2 screens for this purpose. Please note that day trading requires a lot of expertise, because the technical analysis of the markets and the ability to read the charts correctly are essential.

As a day trader, you also need to be excellently informed about the daily events that significantly influence the markets. However, beginners often have problems with day trading, especially at the beginning, and are better advised to use other trading methods.

Especially CFDs are extremely popular in day trading, because CFDs are very flexible and have a large leverage. This leverage can increase profits, but at the same time it can also increase losses. The right trading strategy as well as a good Risk Management are very important to reduce the high risk of loss in CFD trading.

Scalping strategy

Scalping is just another form of day trading. The only difference: the positions, often in the area of CFDs, are held even shorter than in day trading, sometimes only a few minutes. Scalping trading takes into account minimal changes in the market. Nevertheless, it can be very lucrative, because here applies "the more the better".

Scalping is also called "high-frequency trading" and is in stark contrast to swing trading, as only very narrow time windows have to provide for profits. In order to still make scalping profitable, you need very high leverage for this. You can imagine that the constant change of positions is not only very time-consuming, but also risky.

For this reason, scalping is especially popular in Forex trading. Because the number of positions is so high, the spreads must be as small as possible. Here it is important to have a very good CFD broker on hand, because too high CFD spreads will reduce your profit. There are CFD brokers that are specifically designed for Forex trading. With our CFD broker comparison you will find good CFD brokers for forex trading.

Systematic trading

Systematic trading is oriented within fixed trading strategies, which traders develop on the basis of their own experience. They are often supported by programmed algorithms that scan the stock market in the form of trading bots based on the defined criteria and can even execute trades in some cases.

It is possible to purchase a trading bot for your systematic trading, but these can be very expensive and require programming skills to maintain. If you are able to program yourself a trading bot according to your own ideas, you can of course alternatively tackle this yourself.

Social Trading Strategy

Social trading is primarily about passive trading, because you only copy the movements of other traders. With the social trading strategy, you do not actively make trading decisions, but rely on the know-how of successful professionals.

If you are interested in social trading, you should stick to the special social trading platforms, through which you can view and copy the trades of other traders. All trades made by the selected trader are automatically transferred to your own portfolio. The selection of the trader you want to copy is done according to your own criteria. The trading strategies of each trader are public and you can find the right trading strategy for you.

Especially for absolute beginners, social trading is very well suited to take the first steps in the world of trading. Little to no experience is required to achieve initial success in social trading. Your success depends on the success of other traders. If necessary, change the trader you copy. One of the largest social trading platforms is offered by eToro. CFD trading is also part of eToro's portfolio.