Top 10 Trading Strategies for Beginners Created: 4th April 2023

Trying to figure out the best ways to approach the markets can be a little overwhelming when it first comes to starting trading. There are many different trading strategies out there, each having their own pros and cons. Nevertheless, for beginners, some of these strategies are ideal. In this article, we will explore the top 10 trading strategies. 

Being one of the simplest strategies, it's perfect for people just starting out. The buy and hold strategy is where you buy a stock or other asset and hold onto it for a long period of time. By implementing this strategy, it can be a fantastic way to build wealth over time. However, patience is key to this strategy’s success.

The cost averaging strategy involves investing a fixed amount of money into an asset on a regular basis. When you buy a fixed amount of an asset at regular intervals, you can take advantage of price fluctuation in order to purchase more shares when the prices are low and fewer when they are high. This will help to smooth out the impact of market volatility on your portfolio.   

The factors involved in this strategy are based on buying assets that are undervalued by the market. Eventually, the market will recognise the true value of the asset, and the price will rise, providing a nice return on investment. Implementing this strategy does require doing your research and analysis, but it can be a good way to discover gems in the market. 

Growth investing strategy focusses on buying shares in companies that have high earnings growth potential, as opposed to value investing. The hope is that the company’s market, customer base and so earnings will continue to grow, and the share price will respond by rising. This strategy can come with a higher amount of risk compared with other value investing; however, the returns can be higher too. 

Momentum trading comprises of buying assets that are displaying strong upward momentum and selling assets that are showing a downward momentum. The momentum trading strategy does require traders to keep abreast of market trends and have the ability to act fast.

This method of trading involves buying assets that are trending up and selling them as soon as they begin to trend downwards. Swing trading does require patience and discipline, however it can be a fantastic way to take advantage of short-term market fluctuations.  

Very similar to swing trading, position trading involves holding positions for longer periods of time, often weeks or months. This strategy does require a good knowledge of market fundamentals and a willingness to take a long-term view.  

Day trading also known as intraday trading involves buying and selling assets within the same day. This strategy requires a considerable amount of time and concentration, also a high risk-tolerance.  

Options trading involves buying and selling options contracts, giving the holder the right to buy or sell an asset at a particular price within a certain time period. It can be complicated, but it can also be  

Forex trading comprises of buying and selling currencies in the foreign exchange market. With this particular strategy you need to understand global economics and political events and again, have some tolerance for risk. With this, it gives you the opportunity to diversify your portfolio and potentially generate high returns. 

All the above strategies come with advantages and disadvantages, and not all of them will be suitable for every trader. By understanding these different strategies, beginners can start to develop their own trading style and discover a strategy that works best for them.