Introduction

As an investor, making well-informed trades is the most important aspect of achieving success. However, it is not always easy to identify the type of trades that will yield the desired return. In this article, I will share a few of my tried and tested opening strategies that have yielded high success rates, using real-world examples.

Strategy 1: Trend Following

Following trends can result in successful trades by identifying the direction in which an asset is moving. When the trend is bullish, buy the asset, and when it is bearish, sell the asset. It is important to remember that there are several types of trends- upward (bullish), downward (bearish), and sideways (range-bound). A few indicators that traders can use to identify trends are Moving Average Convergence Divergence (MACD), Relative Strength Index (RSI), and Moving Averages.

For instance, in May 2021, the share price of Tesla, Inc. (TSLA) began to drop sharply, with the RSI indicator marking oversold conditions. Traders who followed the bearish trend were able to sell TSLA at the right time, resulting in successful trades.

Strategy 2: Breakout Trading

Another common strategy that can yield positive returns is breakout trading. A breakout occurs when an asset's price surpasses important support or resistance levels. It is important to keep an eye on trading volume, which is a crucial aspect of confirming the breakout. The aim is to make trades when the price breaks out, with the expectation that the price will continue moving in the same direction.

A good example of a breakout in action occurred in June 2021, when Bitcoin broke past the $40,000 resistance level, which had been a key resistance level for several weeks. Traders who bought Bitcoin after the breakout enjoyed several positive trades as the price continued to push higher.

Strategy 3: Swing Trading

Swing trading involves holding positions for a few days or weeks to take advantage of short-term price fluctuations. This method differs from day trading, which entails buying and selling stocks within the same trading period. Swing traders should seek out assets that are volatile, with ample price movements.

For instance, during the COVID-19 pandemic in 2020, several biotech companies raced to develop vaccines, resulting in volatile market conditions. Moderna (MRNA), a biotech company that developed a successful COVID-19 vaccine, saw a steady uptrend, but also had frequent swings in price. By using swing trading, traders could have capitalised on the price movements.

Conclusion

The strategies above are only a few examples that can assist traders in making informed decisions. There is no golden rule in trading, and no strategy guarantees a 100% success rate. Combining multiple strategies and indicators can help traders make better choices and mitigate potential losses. It's also important to conduct research and analyse market trends to stay on top of asset prices, so you can make the best trades possible.