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Leverage Trading

Leverage trading strategies

Introduction

Leveraged trading strategies can differ from trader to trader, it really depends on their personalities. The common types of leveraged trading strategies used are scalp trading, swing trading and day trading. These types of trading strategies are common amongst many other forms of trading, they are not solely subjected to leveraged trading. Understanding each strategy is crucial to determine which methodology is efficient for the trader. The following section will outline and discuss all the different types of strategies in detail.

Scalp Trading

Scalping is a trading strategy used in leveraged trading that heavily focuses on smaller movement in an asset.  Scalp trading can range from a few trades to hundreds of trades per day. The strategy is designed to be fast past where it requires a high level of focus and determination. The main objective for a scalper is to end the day green, scalping is designed to produce cashflow within the trader’s methodology. 


Some of the key characteristics of Scalp Trading are the following: 


-Hundreds of trades daily can be taken 

-Focuses on smaller price action movements 

-Strict risk management processes need to be in place


Day Trading

Day trading is a common leverage strategy used; it is designed to drive profit on the same day as entry. Day trades can last up to an hour or even the whole day, they are very mechanical and can produce high levels of gains. This methodology required traders to be active in the market, monitoring their positions throughout the day by using entry and exit strategies. 


There are many different aspects of day trading, this can stem from simply support and resistance concepts to highly advanced order flow software’s. Whichever practical method used; an edge must be present to stay consistent. Therefore, day trading requires a skill in technical analysis and self-taught discipline. 


Some of the key characteristics of Day Trading 


-Different nuances involved such as support and resistances 

-Trades can last up to an hour or a full trading session 

-Required commitment and high levels of discipline 


Swing Trading

Swing trading is another common leveraged strategy use around the globe. The objective of swing trading it to drive profit from significant market moves. These moves can be either long and or short biased, depending on the trade setup. The duration of a swing trade can last to a few days to several weeks and even months. 


The technical analysis helps traders project key market points in where swings are likely. Traders execute at these swing locations with the goal of riding the wave in the market whilst taking profit along the way. 


Some of the key characteristics of Swing Trading is the following:


-Technical Analysis determines key swing points 

-Trades can last from one day to several weeks 

-Swing Trading focuses on catching major market movements