Trading Strategy Guides
Master proven trading strategies with our comprehensive guides. Each strategy includes detailed entry/exit rules, risk management protocols, and backtesting results for optimal implementation. Perfect complement to our position sizing and risk management calculators.
Strategy Categories
Explore trading strategies organized by market approach and conditions
Moving Average Crossover Strategy
Classic trend-following strategy using two moving averages to identify trend changes and generate entry/exit signals. Ideal for trending markets with clear directional moves.
📊 Entry Rules
- Fast MA (20) crosses above Slow MA (50) for long positions
- Fast MA (20) crosses below Slow MA (50) for short positions
- Confirm with volume spike (>150% of 20-day average)
- Enter at market open after crossover confirmation
🎯 Exit Rules
- Exit when opposite crossover occurs (MA reversal)
- Take profit at +15% for long, -15% for short positions
- Stop loss at -5% from entry point
- Trailing stop: Move stop to breakeven when +10% profit
🛡️ Risk Management
- Risk maximum 2% of account per trade
- Position size = Account × 2% ÷ Stop Loss Distance
- No more than 3 concurrent positions
- Avoid during major news events or low volume periods
⚙️ Optimal Conditions
- Timeframe: Daily charts (4H for day trading)
- Markets: Forex majors, large-cap stocks, crypto
- Best in: Strong trending markets with clear direction
- Avoid in: Choppy, sideways markets with frequent whipsaws
💻 Implementation Pseudo-Code
// Moving Average Crossover Strategy
fast_ma = SMA(close, 20)
slow_ma = SMA(close, 50)
volume_avg = SMA(volume, 20)
// Entry Conditions
long_signal = crossover(fast_ma, slow_ma) AND volume > volume_avg * 1.5
short_signal = crossunder(fast_ma, slow_ma) AND volume > volume_avg * 1.5
// Position Management
if (long_signal and no_position) {
entry_price = close
stop_loss = entry_price * 0.95
take_profit = entry_price * 1.15
position_size = account_balance * 0.02 / (entry_price - stop_loss)
enter_long(position_size)
}
if (short_signal and no_position) {
entry_price = close
stop_loss = entry_price * 1.05
take_profit = entry_price * 0.85
position_size = account_balance * 0.02 / (stop_loss - entry_price)
enter_short(position_size)
}
// Exit Management
if (in_long_position) {
if (close <= stop_loss OR close >= take_profit OR crossunder(fast_ma, slow_ma)) {
close_position()
}
}
if (in_short_position) {
if (close >= stop_loss OR close <= take_profit OR crossover(fast_ma, slow_ma)) {
close_position()
}
}MACD Trend Strategy
Momentum-based trend strategy using MACD histogram and signal line crossovers to identify trend strength and optimal entry points with trend confirmation.
📊 Entry Rules
- MACD line crosses above signal line (bullish crossover)
- MACD histogram turns positive and rising
- Price above 50-period EMA for trend confirmation
- Wait for pullback to EMA for better entry
🎯 Exit Rules
- MACD line crosses below signal line (bearish crossover)
- MACD histogram turns negative for 2 consecutive periods
- Price closes below 50-period EMA
- Stop loss at recent swing low minus 1 ATR
Trend Channel Breakout
Identifies strong trends by trading breakouts from established trend channels with momentum confirmation and dynamic stop-loss management.
📊 Entry Rules
- Identify established trend channel (minimum 3 touches per side)
- Enter on breakout above upper channel line (bullish)
- Confirm with increased volume (>200% of average)
- RSI above 50 for bullish momentum confirmation
🎯 Exit Rules
- Price falls back into the channel for 2 consecutive periods
- Take profit at 2x channel width from breakout point
- Trailing stop at previous channel boundary
- Exit if no follow-through within 5 periods
Ichimoku Cloud Strategy
Comprehensive trend-following system using Ichimoku Kinko Hyo components including cloud analysis, Tenkan/Kijun crosses, and momentum confirmation for robust trend identification.
📊 Entry Rules
- Price above Kumo cloud (bullish cloud)
- Tenkan-Sen crosses above Kijun-Sen (TK cross)
- Chikou Span above price from 26 periods ago
- Wait for pullback to cloud top for optimal entry
🎯 Exit Rules
- Tenkan-Sen crosses below Kijun-Sen (bearish TK cross)
- Price closes below cloud (Kumo breakout failure)
- Chikou Span turns negative vs historical price
- Trail stop using Kijun-Sen as dynamic support
RSI Oversold/Overbought Strategy
Profits from market extremes using RSI divergences and overbought/oversold conditions with confluence from support/resistance levels.
📊 Entry Rules
- RSI below 30 (oversold) near key support level
- Bullish divergence: price makes lower low, RSI makes higher low
- Wait for RSI to cross back above 30 for entry confirmation
- Volume should be above average during the reversal
🎯 Exit Rules
- RSI reaches 70+ (overbought territory)
- Price reaches next resistance level
- Stop loss below recent swing low (maximum 3% risk)
- Take partial profits at RSI 60, full exit at RSI 70
Bollinger Band Squeeze
Exploits low volatility periods followed by explosive moves using Bollinger Band width and momentum indicators for precise timing.
📊 Entry Rules
- Bollinger Band width at 20-period low (squeeze condition)
- Price consolidated between bands for minimum 10 periods
- Enter on first close outside Bollinger Bands
- Confirm direction with momentum indicator (RSI or MACD)
🎯 Exit Rules
- Price touches opposite Bollinger Band
- Bollinger Band width expands to 20-period high
- Stop loss at middle Bollinger Band (20 SMA)
- Take profits when momentum indicator shows divergence
Mean Reversion to VWAP
Trades price deviations from Volume Weighted Average Price (VWAP) with statistical boundaries for high-probability mean reversion setups.
📊 Entry Rules
- Price deviates >2 standard deviations from VWAP
- Volume decreases as price moves away from VWAP
- Enter fade position toward VWAP with tight stop
- Best during first 2 hours and last hour of trading
🎯 Exit Rules
- Price returns to within 0.5 standard deviation of VWAP
- Time-based exit after 30 minutes if no mean reversion
- Stop loss at 3 standard deviations from VWAP
- Scale out as price approaches VWAP levels
Stochastic Oversold/Overbought Strategy
Classic oscillator-based mean reversion strategy using Stochastic %K and %D crossovers in extreme zones with divergence confirmation for high-probability reversals.
📊 Entry Rules
- Stochastic %K below 20 (oversold) and %D below 20
- %K crosses above %D while both below 20 (bullish crossover)
- Confirm with bullish divergence vs price action
- Price near established support level for confluence
🎯 Exit Rules
- Stochastic %K reaches 80+ (overbought zone)
- %K crosses below %D while both above 80 (bearish crossover)
- Stop loss below recent swing low (2% maximum risk)
- Take profits in stages: 50% at resistance, 50% at overbought
Support/Resistance Breakout
Captures momentum from key level breakouts using volume confirmation and failure rate analysis for high-probability breakout trades.
📊 Entry Rules
- Identify key support/resistance tested minimum 3 times
- Price breaks level with >300% average volume
- Enter on first pullback to broken level (now support/resistance)
- Confirm with momentum indicator alignment
🎯 Exit Rules
- Take profit at next major support/resistance level
- Trail stop at breakeven when profit equals initial risk
- Exit if price closes back below/above broken level
- Maximum holding period: 10 trading days
Triangle Breakout Strategy
Trades breakouts from triangle consolidation patterns with volume analysis and false breakout filters for reliable trend continuation signals.
📊 Entry Rules
- Identify triangle pattern (minimum 5 touches on trend lines)
- Pattern should be at least 15 periods in duration
- Enter on breakout with volume >250% of pattern average
- Measure triangle height for profit target calculation
🎯 Exit Rules
- Profit target: Triangle height projected from breakout point
- Stop loss: Opposite side of triangle
- Exit if price re-enters triangle within 3 periods
- Scale out partial profits at 50% and 100% of target
Range Breakout with Volatility
Exploits volatility expansion after consolidation periods using Average True Range and volume patterns for timing optimal breakout entries.
📊 Entry Rules
- ATR at 20-period low (volatility compression)
- Price range-bound for minimum 8 periods
- Enter on first close outside range with expanded ATR
- Volume must exceed 20-period average by 150%
🎯 Exit Rules
- Take profit when ATR reaches 20-period high
- Exit if price returns to range within 2 periods
- Stop loss at opposite side of range
- Trail stop using 2x ATR from entry point
Opening Range Breakout Strategy
Day trading strategy that identifies and trades breakouts from the first 30-60 minutes of trading with volume and momentum confirmation for intraday momentum plays.
📊 Entry Rules
- Define opening range: high/low of first 30 minutes
- Enter on breakout above/below opening range with volume
- Volume must exceed 150% of 20-day average volume
- Confirm with pre-market sentiment and gap analysis
🎯 Exit Rules
- Take profit at 2x opening range height from breakout
- Stop loss at opposite side of opening range
- Exit by market close (no overnight positions)
- Scale out if momentum stalls at key resistance levels
Gap Trading Strategy
Exploits price gaps with statistical analysis of gap-fill probability and momentum continuation patterns for short-term high-probability trades.
📊 Entry Rules
- Gap >2% from previous close (up or down)
- Gap occurs without major news catalyst
- Enter fade trade toward gap fill within first 30 minutes
- Volume on gap should be below 150% of average (avoid runaway gaps)
🎯 Exit Rules
- Exit when gap is 80% filled (partial gap fill)
- Stop loss if gap expands by additional 1%
- Time-based exit after 2 hours if no progress
- Full exit if gap completely fills
Momentum Continuation Strategy
Rides established momentum using relative strength analysis and momentum oscillators for trend continuation trades with optimal risk-reward ratios.
📊 Entry Rules
- Stock/asset showing relative strength vs benchmark (>20%)
- Momentum indicator (ROC) above 80th percentile
- Enter on first pullback to 10-period EMA
- Confirm with increasing volume pattern
🎯 Exit Rules
- Momentum indicator falls below 50th percentile
- Relative strength turns negative vs benchmark
- Price closes below 20-period EMA
- Trail stop at 2x ATR below highest high since entry
News-Based Momentum Strategy
Captures momentum from earnings announcements and major news events using sentiment analysis and volatility prediction for event-driven trading.
📊 Entry Rules
- Major earnings beat/miss greater than 10% vs expectations
- News sentiment score greater than 80 (very positive) or less than 20 (very negative)
- Enter momentum direction within first 10 minutes post-news
- Implied volatility should be declining post-announcement
🎯 Exit Rules
- Exit before next major news event or earnings
- Take profits when move equals 1x average daily range
- Stop loss at 0.5x average daily range
- Maximum holding period: 3 trading days
Volume Price Trend Strategy
Combines volume and price momentum to identify strong directional moves using Volume Price Trend indicator with confirmation from price action patterns.
📊 Entry Rules
- VPT indicator showing strong upward/downward trend
- Volume increasing on price moves in trend direction
- Enter on pullback to 21-period EMA with VPT support
- Confirm with positive/negative price momentum (ROC > 5%)
🎯 Exit Rules
- VPT indicator diverges from price direction
- Volume decreases significantly on trend moves
- Price closes below/above 21-period EMA
- Trail stop at 1.5x ATR from highest/lowest point
Strategy Implementation Checklist
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