A trading strategy is a plan with the intention of making profitable returns, this is done by setting out specifications on risk and capital and when to enter and exit a position. There are numerous types of strategies but only a few that are set to be the most common.

The most widely used trading strategies are scalping, day trading, swing trading, position trading, and trend trading.

Day trading

It’s the most well-known active trading strategy, which is the buying and selling of securities within the same day. Day traders take advantage of small price moves and price fluctuations in between market open and close, they don’t leave opened positions overnight.

Day traders also sometimes called intra-day trading is used to minimize the risk of overnight market volatility, Day traders can face an issue when their positions don’t move throughout the day because it’s over a short span of time, resulting in flat trades.

Swing trading

This strategy is typically for traders who wish to hold positions for several days and perhaps even for a number of weeks, usually used by traders who lack the time to sit and monitor their positions.

Swing traders enter positions when they speculate that markets will rise.

Trend trading strategy

Trend trading is designed to follow the direction of an asset, when the price moves in one overall direction, either up or down. Through apparent uptrends or downtrends, a trader can take advantage of new highs or new lows in a downtrend.

This strategy involves technical analysis to define a trend. Trend traders enter a trade when there is a pre-determined trend for analyzing specific markets including treasuries, stocks, currencies and commodities.

Scalping

This strategy is used by placing short-term trades with small price movements. Scalpers expect all small profits to accumulate and take their profits before the market has a chance to move, focusing on increasing their smaller winning trades. This type of trading normally requires tight spreads and liquid markets. it's one of the quickest strategies used by traders.

Scalpers usually trade in the busiest times of the trading day.

Position trading

Position trading is when traders hold long-term positions of a security, usually throughout months or even years. It’s a strategy more suitable to a bull market defined by strong trends, looking for successive higher highs or lower highs to determine a trend. Position traders see long-term trends as more profitable.

It is typically done by using technical and fundamental analysis, relying on global market trends and historical patterns.