7 Epic Trading Setups & What To Trade

Trading setups to consider will vary depending on your preferences, including things like trading with large or small stop losses, staying in trades for long or short periods of time and how big the targets are.

Risk management concepts aside, here are 7 setups to get you through the trading year.

1. Dollar Cost Averaging

Buying into instruments that are rising is a common way to trade among shares, but what about trading Index CFD’s like the ASX200, the FTSE and the Dow Jones. Did you know you can buy small portions of these index markets, with leverage, at periodic times. Given the nature of these financial instruments, they are effectively designed to be ever increasing over time, albeit the swift declines from time to time when the economy becomes uncertain and frail. 

Dollar Cost Averaging can also be effective for other markets that are rising heavily, like Orange Juice for example. Check your FXT Navigator (Free Tool) and see what markets are making moves. 

This method of trading and investing is a function of buying small amounts of the asset and holding it with the desire to benefit from upward movement on the asset. 

2. Scalping

Scalping is a way of taking advantage of small movements. Often used with spikes up or down when the market moves quickly, looking for a small amount of profit from anomalies in the market. 

Scalping can be used on markets with a small spread and good volatility. The markets to look for will have a small bid and ask spread and have quite large movements in a short space of time. 

3. Bollinger Rejection

When an instrument rejects from a long time frame bollinger band, it can often be seen heading towards the opposing band over the long term. The instrument isn’t specific, as it depends on what markets are close to their weekly or daily bollinger band limits either up or down. 

4. Moving Average Pullback

Moving average pullbacks are for markets that are moving up and have a pullback or sell off that reaches the moving average, where traders may look to buy. Many traders use a 200 period moving average.

5. Carry Trade

The carry trade is a trade that looks to hold a position overnight or for longer periods of time that can benefit from a positive swap. A positive swap simply means getting paid for holding an asset that has a positive swap figure (found by checking Symbol Parameters). 

6. Selling The News

Bad news can often set off a chain reaction of selling among the symbols affected. Being ahead of the game and keeping an eye on the news and real world events can be critical in finding opportunities to sell the bad news. Beware of the unusual buying even when bad news is present, sometimes the market is irrational and will take the opposite direction to what seems logical.  

7. Mean Reversion

Mean reversion is a way of trading two assets that have a correlations relationship. When one asset rises and the other falls (the ratio between the 2 assets changes), the trader buys the dropping asset and sells the rising asset to look for a movement back to the mean of the two assets. If the mean is reverted to soon after, both the short position and the long position should earn a profit. Keep in mind, the mean figure can change over time so ideally the trade works provided the mean stays similar. 

Where To Look

These 7 trade setups and assets could be what you are looking for, remember to check the symbol properties in your MetaTrader platform and be sure to download your FREE FXT Navigator tool so that you can easily identify market movers and keep track of what is going on in the world at the click of a button, in one dashboard. 

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