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3 Short-Term Trading Strategies Everyone Should Use

Adam Lienhard
Adam
Lienhard

Short-term trading is a style of trading that involves opening and closing positions within a few days or even less. It can be very profitable, but also very risky. In this article, we will explore the top three strategies to consider for day traders and scalpers.

1️⃣ Breakout trading

This strategy involves buying or selling an asset when it breaks out of a consolidation range or a significant price level. 

The idea is to catch the momentum of the breakout and ride the trend until it reverses or slows down. Breakout traders use technical analysis tools such as trend lines, support and resistance levels, and chart patterns to identify potential breakout points.

2️⃣ Moving Average crossover strategy

This strategy involves using two or more Moving Averages of different periods to generate buy and sell signals. 

The most common ones are the 50-day and 200-day Moving Averages. 

When the shorter Moving Average crosses above the longer one, it indicates a bullish trend and a buy signal. When the shorter moving average crosses below the longer one, it indicates a bearish trend and a sell signal. 

Moving Average crossover traders use other indicators such as volume, momentum, and price action to confirm the signals and filter out false ones.

3️⃣ Carry trade strategy

This strategy involves borrowing a low-interest currency and using it to buy a high-interest currency. 

The difference between the interest rates is the profit (or the carry.)

Carry traders look for stable and predictable market conditions, where the exchange rate does not fluctuate too much and the interest rate differential remains favorable. Carry traders also use leverage to amplify their returns, but this also increases their risk.

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