Before You Learn Strategies, Learn This
No strategy works all the time. The edge isn't in the strategy itself — it's in your ability to execute it consistently, manage risk, and adapt when conditions change. That said, having a structured approach is infinitely better than guessing.
Here are five strategies worth studying.
1. Breakout Trading
The idea: A stock consolidates in a range, then breaks through resistance (or support) with volume. You enter in the direction of the break.
When it works: Trending markets with high participation.
Key rule: Wait for confirmation. False breakouts are common. Look for a candle close above/below the level, ideally with above-average volume.
2. Pullback Trading
The idea: In a trending market, prices pull back to support (in an uptrend) or resistance (in a downtrend) before continuing. You enter during the pullback.
When it works: Strong trending environments.
Key rule: Use moving averages (20 EMA, 50 EMA) as dynamic support/resistance. The pullback should hold a key level before you enter.
3. Mean Reversion
The idea: Prices that deviate too far from their average tend to snap back. You trade the reversion.
When it works: Range-bound, choppy markets.
Key rule: Use Bollinger Bands or RSI to identify overextension. Avoid using this in strong trends — a stock can stay "overbought" much longer than you can stay solvent.
4. Gap Fill Trading
The idea: When a stock gaps up or down at the open, it often fills the gap (returns to the previous close) within the session.
When it works: Best with small to medium gaps on liquid stocks.
Key rule: Not all gaps fill. Focus on gaps that aren't driven by major news or earnings.
5. Momentum / Trend Following
The idea: Buy what's going up, sell what's going down. Ride the trend until it reverses.
When it works: Trending markets with clear direction.
Key rule: Use trailing stops to protect profits. The hardest part of trend following is holding through pullbacks without getting shaken out.
Track What Works for You
The most important step: journal every trade with a setup tag (Breakout, Pullback, etc.) and track your win rate and P&L by setup type. After 50+ trades, the data will tell you which strategies suit your personality and edge. Our position size calculator can help you size each trade correctly, and our consistency score tracks how well you execute.