What is a Trading Strategy?

Trading strategies are essential tools for investors seeking to make informed decisions about when to buy or sell financial instruments. A trading strategy is essentially a set of rules created by a trader to determine the best entry and exit points for an instrument. These rules are based on various factors, such as technical analysis, market trends, and economic indicators.

There are two primary types of trading strategies: fundamental and technical. Fundamental strategies require investors to analyze various aspects of the global economy, such as macroeconomic factors, industry conditions, and political situations, to identify trading opportunities. This approach requires a solid economic education and a deep understanding of the factors that affect prices.

On the other hand, technical trading strategies are more straightforward and easier to implement. Technical analysis involves using chart patterns, price action, and technical indicators to identify trading signals. There are several approaches to technical analysis that investors can use, such as trend following, momentum trading, and swing trading, among others. Each approach has its own set of rules, and investors can choose the one that suits their trading style and objectives.

When creating a trading strategy, it’s important to consider several factors, such as risk tolerance, time horizon, and trading objectives. A well-designed strategy can help investors maximize profits and minimize losses, while also providing a clear framework for decision-making. Additionally, investors should constantly evaluate and refine their strategies based on market conditions and changing economic factors.

TradingKit.net is a resource that provides traders with a range of technical analysis tools and resources to help them create and implement profitable trading strategies. The overall list of the available tools could be accessed via the link.

Fundamental vs Technical analysis

Which trading strategy is profitable?

Every trader inevitably asks themselves this question, and there are several key points to consider.

As mentioned earlier, a trading strategy must align with your personality, which may require some experimentation. It’s also important to define a timeframe for your trading style, as there are several types of trading styles ranging from short to long timeframes.

Some traders prefer short-term trading, while others prefer a “set and forget” approach. Additionally, traders may adjust their strategy based on current market conditions.

Scalping involves very short trades, sometimes held for just a few minutes or even seconds, with a scalper seeking to profit from a few pips before exiting with very low risk. This strategy requires the use of low timeframe charts ranging from 1 minute to 15 minutes.

Day trading, on the other hand, involves activity within a single day, with a trader opening and closing a trade before the end of the day. The main timeframe used for day trading is 1 hour, and the strategy eliminates the risk of being affected by big moves that happen overnight. Day trading strategies are useful for beginners in trading.

Swing trading is a forex trading strategy where positions are held for several days, and the widely used timeframe is 4 hours or even daily. Swing traders can hold positions overnight and over the weekend, accepting this kind of risk.

Investing, also known as positional or long-term trading, is usually associated with trend following to maximize profit from major price movements. A long-term trader mainly uses daily or even weekly charts, and this strategy requires macro analysis of key economic factors. It is suitable for traders who have patience and discipline.

Scalping trading strategy

As an example of a scalping strategy, there is the following one. As mentioned earlier, scalping is a strategy for lower timeframes so we use the particular setup:

  • 1 Minute Timeframe
  • Bollinger Bands with Period 10 and Deviation 1
  • Stochastic indicator with %K period 10, %D period 3 and Slowing parameter 3

The strategy is as simple as that: when a 1-minute candle closes below the Lower edge of a Bollinger Band and the Stochastic indicator is below the 20 thresholds, we place a Sell order with the stop beyond the opposite Upper Band.

We close the Sell position when any bar closes above the Upper Band, as shown in the image below.

The Buy setup is the opposite: we enter Buy when the 1 Minute bar closes above the Upper Bollinger Band and Stochastic is above the 80 threshold. Liquidation of Buy position is made when the candle closes below the lower edge of the Bollinger Band.

scalping trading

Day trading strategy

The sample of day trading strategy could be the simple using of Supply and Demand with Swap zones indicator on 30 Minutes chart.

The strategy is easy to use: when price breaks the Supply zone we place a Buy order with a Stop-loss slightly below the broken zone. We hold this position till the end of the day.

The Buy setup is similar: we enter Sell trade when the Demand zone is broken on the 30 Minutes timeframe and close the position at the end of the current day.

This strategy is fairly simple to manage because you can find the entry setup, enter the position, place your stop-loss, and just get back to your terminal at the end of the day to close it.

day trading

Swing Trading

As a strategy for swing trading, the following setups could be provided. Using the Multiple indicator with multi-frame possibility that allows getting signals on up to 10 criteria at once.

On H4 charts we enter Long when all the internal indicators show green blocks forming a united entry signal. We close the position when the opposite Sell signal occurs.

Short trades are executed when all the blocks of the certain bar show red blocks forming a sell signal. The trade is closed when opposing Buy possibility shows up.

Swing Trading


The last-mentioned strategy type is investing that is usually associated with long-term trading. One of the ways to trade this strategy is to use the Supply and Demand Multi Timeframe Indicator that shows the zones of Demand and Supply that have been formed by a fractal price action pattern.

The basic idea behind it is to use it on Daily charts and above to enter Long trades when the price enters the Demand zone formed by the indicator. The target for that trade is the opposite Supply zone. The stop-loss could be placed beyond the lower edge of the demand zone.

For Sell trades it is the vice versa set up – when the price enters the Supply zone, the Sell trade should be executed with the target at the opposite Demand zone and the stop-loss slightly above the Supply zone.

For this strategy there are also two approaches available: you can either set and forget, i.e. enter the trade, place Stop-loss and Take-profit and wait till price hits one of them, or periodically monitor how the trade goes and trail the stop or at least move it to break even to protect the profit.

long term investments


It’s important to mention that overall trading is about winning and losing and every trader’s goal to keep the risk under control. You can do it either manually or using Risk Manager software. There are no simple Forex trading strategies that can give 100% profitable trades and so do not trust someone who is promising you risk-free opportunities.

At the very start, you should use demo trading accounts (see our broker reviews to know which brokers offer them) to test several types of trading strategies to learn which one suits you most. After a successful period of trading on a demo, the next step could be making a deposit to a live account. Just remember that the main goal of a trader is to lose as little as possible, the winners will come themselves.