In-depth technical analysis is a must for developing the best trading strategies. In this post, I share my favorite strategies to spot and ride impulsive moves. You can use them for trading stocks, futures, and other financial markets. Moreover, they are perfect for both day and swing trading.

Best trading strategies that work

18-day moving average strategy

I have chosen to use an 18-day moving average to help us understand commodity prices. There is no magic to this average, it was chosen largely because it has been used for years with success and was/is readily available in chart books and software. While none of us would resist the Law of Gravity, traders every day disregard the Law of Averages. The basic rule is that if the price is below the 18 bar average you probably don’t want to be long unless there is an EXCEPTIONAL REASON to buck the trend.

Rules for the 18-day moving average

A buy signal will require that we have two consecutive days with lows that are above (greater than) the 18 day moving average of closing prices. Neither of these days can be an inside day (that’s a day with a lower high than the previous day as well as a higher low). Given this condition, we will go long at the highest high of these two bars.

A sell signal will require that we have two consecutive days with highs that are below (less than) the 18-day average of closing prices. Neither of these can be an inside day. Given this condition, we will go short at the lowest low of these two bars.

day trading strategies

This system does make money on its own without any setup criteria. I use it often on managed accounts. This is comforting, we know it works, but the accuracy is middle and it is replete with whipsaws. Our purpose as traders is to bypass as much of this whipsaw as possible. I know of no better way than with the setups, thinking, and common sense.

Qualified trend line break strategy

We need to draw trend lines by connecting the two most recent declining short term highs to create a down trend line, for buys. For sells, we connect the two most recent higher short-term lows.
Lots of times the market hits the trend line, but then… bounces right back with no trend change! I will share tips on how to tell if a trend line breakout would succeed or not. The idea is that if the day before the expected trend line break (to the upside for a buy signal, reverse it for a sell) has an up close the breakout is suspect. Exceptions would be inside days following down close days and up days that close below the opening, those days would not disqualify taking a trade.
Gapping above the trend line, even if the up-close day was present, is ok for entry. I do like to see such gap moves from the opening go a few ticks to confirm the buy, down a few ticks to confirm a sell.

Here is a summary of the qualified trend line break

FOR BUYING
1) A trend line break to the upside will most likely be false if the day prior to the break was an up close.

best trading strategies swing

Unless
a) the up close was an inside day and the prior day was a down close
b) the market gaps above the trend line and trades one tick higher
c) the up close was below the opening of that same day

FOR SELLING
A trend like break to the downside will most likely be false if the day prior to the break was as down close.

Unless
a) the down close was an inside day and the prior day was an up close
b) the market gaps below the trend line and trades one tick lower
c) the down close was above the opening of that same day

In conclusion

Those are the best time-tested strategies that really work. Certainly, they work better for swing trading, especially, when the market has a strong fundamental setup. However, I have many followers that use these strategies for day trading. And, they have a very good winning rate.

Best Trading Strategies to Profit [Full Guide] by Inna Rosputnia

Wishing you a great week!

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