What are the best stock trading strategies for beginners? To become a successful trader or successful in any venture in life, you have to hone your skills through discipline and practice. Discipline and practice will help keep the TWO big enemies of trading, greed, and fear, out of the equation. Regardless of the instrument you trade, your profits depend on choosing the right trading strategy for the job. In this article, I’ll discuss the best stock trading strategy for beginners – you may be surprised about what I have to say.
Which Trading Strategy Is Best for Beginners?
Day trading or even swing trading, for that matter, provides hope for those wanting to escape the shackles of a boss.
But, even if that’s not your motivator, a few hundred or thousand dollars a month would make a significant difference in many people’s lives.
There’s no one best trading strategy. Yes, you read that right.
If I had a quarter for every time, a new trader asked me, “what is the best trading strategy?” I’d be a millionaire a few times over.
Let me be honest with you; I asked the same question when I got started trading. Quite frankly, I’m lazy and wanted to know the most straightforward, easiest, and quickest strategy to make me money.
I was in for a rude awakening.
There is not a “best” strategy, but there are also hundreds of “best” strategies. Unfortunately, they’re not all the “best” for me, nor will they be for you.
Let’s unpack this. For starters, how do you define the “best”? Is it based solely on the highest returns, time or even the upfront capital required? So, what might seem to be the “best” for you may be awful to another trader.
For these reasons, I highly recommend you check out our video on day trading strategies.
The Importance of Effectiveness
It matters little if you have the best materials and study your butt off if the time-to-fluency is 20 years. The ROI won’t compel you to stick with it. For this reason, you must ask yourself, “Will this strategy allow me to reach my trading goals with the fewest number of exposures within the shortest time? “If the answer is no, your strategy must be refined or replaced.
Have you heard of Italian economist and sociologist Vilfredo Pareto? He came up with the concept of The Pareto principle, which is seen across all walks of life. Also known as the 80/20 rule, it was one of Vilfredo Pareto’s most noteworthy theories. Fundamentally it boils down to this: 80% of the results in any endeavor come from 20% of the input, material, or effort.
Below are some examples of the Pareto principle at work:
- 80% of the work in a group project is done by 20% of the group
- In fact, 80% of revenues come from 20% of the products
- 80% of engine failures come from 20% of possible causes
I would tend to agree, and this translates directly into success in trading. There’s no need to study and understand the hundreds of strategies out there; just learn a few and learn them well. In fact, once you narrow down your trading style, learning just 20% will be sufficient for 80% of your returns.
To understand 95% of the strategies out there and become profitable could require ten years. There is a point of diminishing returns where, for most people, it doesn’t make sense to acquire more strategies. Dare I go out on a limb and say pick just one or two and master them? Perhaps, yes.
Which Strategy Is Best for Stock Trading?
Personally, I suggest that instead of finding the best trading strategy, you should first know yourself and what you want to achieve through trading. For example, futures might be a better option for someone who can only trade after hours because they have a full-time job. After that, you can choose the “best” trading strategy to help you meet your trading goals.
Day Trading Strategies For Beginners You’ll Learn At Bullish Bears
The list is endless but don’t worry, by becoming a member we will help you choose the best strategy for your needs. We cover everything from the morning breakout, reversals, ride the 9 to even the morning panic pattern.
Now I know I said there isn’t one “best” stock trading strategy, but a few have stood the test of time profit-wise.
Because markets are fluid and constantly changing, no trading strategy will work all the time. But, some work most of the time. And one, in particular, is known as the opening range breakout.
Opening Range Breakout
This popular yet simple trading strategy has been around for decades. Of course, I will oversimplify things here, but an opening range breakout is just that: a break from the opening range.
Simply, it’s just a trade taken above or below the market’s opening range. Many love trading the opening range breakout because it’s easy to spot, easy to make a profit, and works on any time frame. We have a whole blog post dedicated to the ORB.
To trade, it is pretty simple as well:
- Pick your time frame.
- Mark out the high and low prices on your chart and the high/low of the previous day
- Draw your support and resistance lines
- Sit and wait for the price to move above or below the range.
- Enter the trade
- Manage your risk by setting profit targets. We recommend keeping your profit targets (PT) within the 2:1 reward/risk area. Let me explain; if you are risking 25 cents, then your first PT is 50 cents from your entry price.
No matter how much you study, it’s impossible to succeed if you select a subpar educational provider with subpar materials.
The Best Stock Trading Strategies for Beginners Conclusion
Even if you select the most effective material and efficient trading strategy, effectiveness and efficiency mean nothing if you don’t practice consistently. Likewise, the best strategy means nothing if you don’t use it.
Don’t overthink it. Pick one or two trading strategies, practice them, perfect them, and profit from them.
We can help you take your trading to the next level. Again, because we understand everyone’s trading style is different, we accommodate. Together with the experts in our trade rooms that cover everything from day to swing trading, we provide coaching and a sense of community. But, of course, in the end, success or failure is up to you; you have to learn, practice, and take action to make it happen.