Types of Options Trading Strategies for Consistent Profits

Trading Strategies

The options trading strategy is one of the most crucial thing to master in this industry. Every trader needs to learn important things to optimize their profits by minimizing their losses. No matter what trading styles you adopt, you can earn consistent profit from this volatile market. Since the price is always fluctuating, it becomes quite tough to predict the next flow of the graph. Here, we will mention the best trading strategies which can be followed to make consistent profits.

Types of strategies to make profits consistently

1. Position trading

This is one of the best styles for beginners. Even professional options traders in the United Kingdom can also work with this method. In this strategy, the trader has to retain the purchased currency or financial instrument for a longer period, which ranges from a few days or weeks to a month.

While dealing using this procedure, you should choose the fundamental investigation to read and study the market. Fundamental analysis deals with external factors, including GDPs, inflation, interest rates, unemployment percentages, economic growth vs recession, political instability, etc. Also, you can use technical indicators to identify the best spot to enter a trade or buy the currency. Online options trading is not that tough once you learn to trade in higher time frame.

Pros

  • Investors don’t have to spend too much time looking at the screen.
  • Best choice for beginners
  • Good risk: reward ratio

Cons

  • You should have good knowledge about the economic world and market
  • Stop-loss is wider
  • Fewer chances to trade

2. Swing trading

After position trading, this one appears. It is a little different from position trading. In this method, you may have to hold the currency technically. Most investors using this process wait for a swing to sell the currency. From the swing, they identify the support and resistance level to buy and sell the trade. The timeframe varies from one hour to four hours. The core concern of swing traders is to wait for a tremendous move to make a larger profit. In this style, you can combine the use of technical and fundamental indicators. A swing trader has to be familiar with the following terms; buy support, sell resistance, trade pullbacks, and trade breakouts.

Pros

  • It can be a great part-time job
  • It is possible to make profits easily

Cons

  • Limited opportunity to ride larger trends

3. Day trading

This is a short-term deal in which you have to execute the deal within the day. Some investors hold the purchase financial instrument for a few minutes or a few hours and then sell it. It is a faster way to earn money. Many people aim to be a professional day trader because of its potential to enter more deals in a day.

Every day these investors have to focus on the volatility taken place within the day. These guys have to be highly skilled to use the technical indicators. They have to know about the use of sell resistance, buy support, moving average indicator, a momentum indicator, and so on.

Pros

  • More chances to trade each day
  • Easy to make money

Cons

  • It can be risky
  • You have to keep looking at the screen

4. Scalping

It is the riskiest process on this list. You can earn money quickly from this style, and it is considered the shortest timeframe in which to execute a deal. The duration ranges from a few seconds to a few minutes (20-minutes maximum). We highly recommend the beginners do not go for this one because it has the potential to blow your account. If you are slow about making decisions and analyzing the chart, never use this strategy. The major concern is – how the market is doing at this time and how you can take benefits from it.

Pros

  • Several chances of trading per day
  • Possible to make a good income

Cons

  • You have to keep looking at the screen for hours
  • Very stressful

These are the most common Forex strategies that beginners can use to make money consistently.

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