Four Trading Styles-tutorial!:mrtq13

I always keep my plannings,and ideas documented/written so that I can review, mamorise, modify them whenever I can…………..Below is an important article that I have written recently. It is about different types of trading in TA. I was looking for an arranged situation of Trading. I mean I wanted to know how many styles are there in trading,and which one is better or of what are needed for a specific style. I wanted to know which one suits me better.

This is an important learning for me-a very important one indeed. I have recently come to know about this…………And this small document can be expanded into several parts to describe the styles of trading. And I will be adding new things with this document(for myself) and share it with all……………

Did you ever think how many trading styles are there………? Trading style can be catagorised. We can categorize trading into four parts. I mean, there are four types of basic styles of trading from TA’s point of view. They are :

1. Retracement or Pullback trading.
2. Breakout trading.
3. Reversal trading.
4. Rangbound trading.

Yeap,you can put trading into only these four category. And depending on what type of trading style you are comfortable with,you chose your style and indicators. You setup your indicators according to the style you chose to trade………….

For example, Moving averages are useless for Rangbound trading styles. Only oscillators are effective for such style. DSE at the moment is in Rangbound trading situation. So,we should heavily depend on oscillators to trade stock like Southeast bank,which is not trending, but in Rangbound situations..

Now go on reading following four types of trading. I will discuss them in details later....... :

1. Retracement or Pullback Trading :

This is the most interesting and profitable trading style! Known as Retracement/pullback trading,this style has several different ways or techniques to trade. For example,one can buy on pullback to Moving averages,or pullback to Fibonacci retracement levels,or pullback at support level,or pullback at pivot levels etc……….

2. Breakout trading :

After pullback/retracement trading style, this one is known to be the most profitable trading style. Ah,the breakout style……….I had hard time to trade it. It is quick and nice! There are a lot of breakout in an uptrend of stock. Trendline is the most useful indicator in breakout trading style……….See the image below. In an uptrend,stocks usually don’t go straight up. It takes rest and creates consolidation patterns.After a stock trade in a range or consolidation for a while,it is usually bound to go up from its range or consolidation area resuming its previous uptrend. If we can enter into the stock before it breaks out of its trading range, we can gain quick profit. The great “turtle traders” were breakout traders……………

3. Reversal trading :

This is known to be the lowest profitable and heavily risky trading style. This can be compared to the axiom :” catching a falling knife”. After a stock goes through a long fall ,it somewhere stops and reverses its downtrend and start to go up. This is sudden and many times uncertain. See the reverse of NTC recently. It suddenly reversed its downtrend. There are several reversal patterns like double bottom, falling wedge,V bottom,etc…….See the reversal below

4.Rangbound trading.

This is an interesting style of trading. When a stock trades in consolidation situation or within a specific support and resistance zone,it can give small and quick profits. Oscillators like Macd,Stochastic are very effective to trade in Rangebound style. The plan is we have to buy near to support level and when the oscillator is oversold,and we have to sell and when he oscillator is overbought. Recently,DSE is trading in Rangebound situation. Oscillators are good in such situation…………Intrestingly,Rangbound trading can turn into Breakout trading…………