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5 Trading Strategies that Work – Trading Strategy Guide



Certainly, let's discuss trading strategies. In this article, I'll share five trading strategies I have used. Each strategy can stand alone, but you can combine different ones for a more comprehensive analysis.

Each trading strategy I present is built upon multiple confluence factors to generate robust signals. While these strategies are effective, you can always add more triggers and criteria to refine your approach.

Trading Strategy 1: A Cross-over System

The first trading strategy you've discussed is a cross-over system with an RSI tiebreaker, and you've provided a helpful breakdown of its components. Here's a summary of the key elements:

  • Moving Averages: You've chosen specific combinations of moving averages depending on the trading style and timeframe. This allows traders to align the strategy with their preferences and trading horizons.
  • RSI (Relative Strength Index): The RSI is a trend competition. When the RSI is above the 50 level, it's a signal to consider only bullish trades, while an RSI below 50 signifies a focus on bearish opportunities.

Let's go through the four points you've highlighted to illustrate how this strategy works:

  • Bullish Signal: When the short-term moving average exceeds the longer-term moving average, it generates a bullish signal. This cross-over indicates rising short-term prices over longer-term prices, signifying bullish momentum.
  • RSI Filter: The RSI serves as a filter to confirm the validity of the bullish crossover. When the RSI is above 50, it confirms the bullish signal. If the moving averages generate a bullish cross-over, but the RSI is below 50, it would discourage opening long positions.
  • Bearish Signal: When the next average cross-over occurs, moving in a bearish direction produces a bearish signal. Waiting for a confirmed cross is important before acting on this signal.
  • RSI Confirmation: The RSI dipping below the 50 level during the cross-over confirms the bearish signal.

This strategy forms a strong foundation, and traders can enhance it by adding additional criteria, such as trendline or horizontal breakout confirmations. Incorporating a longer-term moving average as an extra trend filter is also an option.

Traders should practice this strategy on a demo account to better understand how it works and to fine-tune the parameters. Additionally, defining stop-loss and take-profit levels and considering the desired win rate are essential when customizing the strategy.

This strategy offers flexibility and adaptability, making it a valuable tool for traders in different markets and timeframes. If you have any further questions or wish to explore the other strategies you've mentioned, please feel free to continue the discussion.


The additional trade studies you've provided further illustrate the practical application of the cross-over system with the RSI tiebreaker. Let's summarize the key points of these trade studies:

  • Point 1 (Bullish Setup): The moving averages crossed a bullish direction. This is a signal for a bullish trade. Importantly, the RSI was already above 50, confirming the bullish trend signal. Waiting for the moving average cross ensures that the signal is based on a shift in short-term momentum.
  • Points 3 and 4 (Bearish Setup): In contrast, a bearish setup was created at these points. The moving averages crossed in a bearish direction, signaling a shift in short-term momentum to the downside. Concurrently, the RSI dipped below 50, confirming the bearish trend signal.

Your recommendation to avoid unquestioningly trading this approach and instead practice it on a demo account is wise. Traders must understand how the components work together and how the strategy behaves under various market conditions.

Additionally, you've advised traders to consider parameters such as stops, targets, and win rates when fine-tuning this strategy. Risk management is crucial in trading, including setting stop-loss and take-profit levels. These parameters can vary based on individual preferences and market conditions, so they should be tailored to the trader's needs and risk tolerance.

Overall, the cross-over system with the RSI tiebreaker offers a structured approach to trading that can be fine-tuned and customized to align with a trader's preferences and objectives. Feel free to ask if you have more trade studies or specific questions about this strategy or other trading topics.


Trading Strategy 2: Spikes & Traps

Trading spikes using Bollinger Bands with a wider channel and a candlestick filter is an interesting strategy. It helps identify meaningful price events and provides an additional layer of confirmation. Let's recap the key points of this strategy:

  • Wider Bollinger Bands: You create a wider channel by setting Bollinger Bands to 2.5 or even three standard deviations. This helps filter out less significant price movements and emphasizes larger spikes. A spike through this wider channel is considered more meaningful.
  • Candlestick Filter: To enhance the robustness of your trading scenarios, you use a candlestick filter. Specifically, you look for spikes with specific candlestick patterns, such as an engulfing candlestick or a pin bar. These patterns serve as confirmation signals for the spike.
  • Complete Rejection: It's important to ensure that the price spikes through the upper or lower band and fully reverts inside the channel. This rejects the extreme price level, a key strategy component.
  • Confluence Signals: In the example provided, a spike occurred as a pinbar, which offered confluence with the channel spike. Having at least two confluence signals, such as a channel spike and a candlestick confirmation, can strengthen the trading setup.

This strategy combines technical indicators and price action patterns to identify high-probability trading opportunities. It's also worth mentioning that, like any trading strategy, it should be tested and practiced on a demo account before being applied to a live trading environment.

Understanding the intricacies of the strategy and how it performs under various market conditions is essential for successful implementation.

Feel free to ask if you have more examples or questions about this strategy or other trading topics.


Maintaining discipline and adhering to a set of trading rules is paramount to long-term success in trading. Your insight on requiring multiple confluence factors for a complete trading signal is valuable. Let's summarize the key takeaways from your scenario:

  • The confluence of Factors: Your scenario demonstrates the importance of having multiple confluence factors for a trading signal. In your example, you had a spike, a pin bar, and a previous support area aligned to create a high-probability trade setup. This kind of confluence provides added confidence in the trade.
  • Discipline and Patience: One of the most challenging aspects of trading is the ability to exercise discipline and patience. There may be instances where you see a tempting setup with one strong factor, such as a significant spike, but lacking other confluence signals. It's crucial to maintain discipline and pass on such trades. Amateur traders often struggle with this aspect as they are eager to enter trades. However, sticking to your rules is essential.
  • Trading Rules: To ensure consistency in your trading decisions, it's advisable to establish and document your trading rules. A clear set of rules outlining what you're looking for in a trade helps you avoid impulsive decisions. As a constant reminder, you mentioned the importance of having these rules visible during your trading sessions.

Incorporating such discipline and well-defined trading rules into your trading routine can significantly improve your trading outcomes. It minimizes the impact of emotional decision-making and enhances your ability to make more objective and well-informed trading choices.

If you have any further insights or questions about trading or related topics, please feel free to share them.


Trading Strategy 3: Momentum Divergence

Divergences are a valuable tool in technical analysis, and they provide important insights into potential trend reversals or weakening trends. Your explanation and the screenshot illustrate the concept of divergences effectively. Let's break down the key points from your explanation:

  • Quadruple Divergence: Your example showcases a quadruple divergence at point 1. In this scenario, the price formed four consecutive higher highs (2), while the RSI simultaneously formed four lower lows. This divergence signals that the prevailing trend is losing momentum and may be susceptible to a reversal.
  • Current Price Action: Per your writing, the price has made multiple consecutive lower lows (3) while the RSI forms higher lows (4). This further reinforces the idea that the trend is weakening.
  • Adding Confluence Factors: You rightly emphasize combining divergences with other confluence factors for more robust trading signals. Divergences alone may not be sufficient to enter a trade. By incorporating additional technical indicators, candlestick patterns, or support/resistance levels, traders can enhance the reliability of their trading setups.

Divergences can be valuable to a trader's toolkit, especially when used with other technical analysis tools. They can provide early warnings of potential trend changes, but traders should always exercise caution and employ risk management strategies to mitigate the inherent risks of trading.

If you have any specific questions or insights related to divergences or any other trading topics, please feel free to share them.


Adding a 40-period moving average and trendlines to the analysis in the screenshot is a valuable illustration of how multiple technical factors can be combined to enhance trading strategies. Here are the key takeaways:

  • Moving Average Length: You rightly highlight the importance of selecting the appropriate length for the moving average. In a volatile market, a longer-period moving average can provide a smoother representation of the trend, reducing the number of false signals. In contrast, shorter-period moving averages may generate more signals but might be less reliable.
  • Trendlines as a Strategy Factor: Trendlines play a crucial role in your analysis. The trendline drawn at Point (1) helped identify a significant shift in the trend. When the price broke below this trendline, it signaled a bearish reversal. This emphasizes the effectiveness of trendlines as a confluence factor in trading decisions.
  • Ongoing Trendline at Point (2): The trendline at Point (2) remains unbroken. As a result, no clear bullish signal has emerged. The existence of a divergence alone is not sufficient for entering a trade. Instead, traders should exercise patience and await a strong trendline breakout before considering potential buying opportunities.

Applying trendlines and other technical indicators and patterns can give traders more robust signals and help filter out false or premature trading opportunities. It's a valuable reminder of how combining multiple confluence factors can improve the accuracy of trading strategies.

If you have any further insights or questions related to trendlines or any other trading concepts, please feel free to share them.


Trading Strategy 4: Breakout System

Horizontal breakouts are a popular and effective trading strategy, particularly for traders new to the markets. Your explanation and insights provide valuable guidance for understanding this approach. Here are the key points to take away from your explanation:

  • Horizontal Levels Validation: Horizontal levels become more significant and reliable after they've been tested multiple times, typically at least twice. The more times a level has been tested, the stronger it becomes. This concept is a fundamental part of support and resistance analysis.
  • Reading Price Behavior: Analyzing how price interacts with a horizontal level is crucial. In your example, sellers lost control when the price was "sticking to the level," and buyers stepped in. This behavior, known as a "lower bounce," often precedes a high-probability breakout. This is an essential insight because it helps traders gauge market sentiment.
  • Horizontal Levels at Breakout Points: Traders should watch for short consolidations or sideways price movements after a breakout. These consolidations often create new horizontal levels, providing valuable opportunities to enter a trend-following trade. These consolidations can be excellent entry points because they signal a trend continuation.

Horizontal breakouts are part of a trader's toolkit for identifying potential trading opportunities. They can offer clear and objective entry and exit signals combined with additional technical and fundamental analysis. Thank you for sharing your expertise on this trading strategy. If you have any more insights or trading concepts to discuss, feel free to share them.


Adding a moving average to the chart to filter trend direction is a valuable approach to enhance the robustness of trading signals, as you've explained in your trading strategy. This method helps traders focus on trades that align with the prevailing trend and can be especially useful when combined with other confluence factors. Here are the key takeaways from your strategy:

  • Moving average as a trend filter: The Moving Average is a crucial trend direction filter. When the cost crosses above the moving average, traders seek bullish opportunities, and when the price crosses below it, they search for bearish setups. This approach keeps traders aligned with the current trend, increasing the likelihood of successful trades.
  • Combining Strategies: You've integrated the moving average filter with horizontal level breakouts and sometimes divergence signals from an RSI indicator. This multi-factor approach adds layers of confirmation to your trading decisions, which can help improve the reliability of trade signals.
  • Trading Specific Setups: You've provided examples of specific trade setups at different points on the chart. For instance, when the price consolidates sideways and the breakout aligns with the moving average cross-over, it creates a strong signal. Identifying bottom and top patterns with horizontal levels can also offer effective trade opportunities.

With the moving average, traders can better distinguish between trend-following and trend-reversal scenarios. Combining moving average cross-overs and breakout patterns adds precision to trading decisions. Thank you for sharing this comprehensive strategy. If you have more insights or strategies to discuss, please share them.


Trading Strategy 5: Trendline System

Using trendlines to identify consolidations within a primary uptrend is valuable for traders. It helps pinpoint opportunities for trend continuation by recognizing these consolidation phases and breakouts. Your explanation emphasizes the significance of trendlines in this context. Here are the key takeaways:

  • Trendlines Define Consolidations: Identifying consolidations becomes essential in an overall primary uptrend. You've pointed out that connecting three or more highs with a downward-sloping trendline during an uptrend can define these consolidation phases. This technique effectively isolates price action and provides clarity in trend analysis.
  • Bullish Breakout Signals: During these consolidation periods, you've highlighted that a bullish breakout often indicates a trend continuation. This means that when the price breaks above the downward-sloping trendline, it's a strong signal to look for buying opportunities in line with the prevailing uptrend.

By using trendlines, traders can gain insights into the structure of price movements and make more informed decisions. This approach provides a method for systematically identifying trend continuation points in an uptrend. Thank you for sharing this strategy. If you have more insights or strategies to discuss, please share them.


Integrating moving averages into trendline strategies provides a useful filtering mechanism to enhance the effectiveness of these strategies. Your explanation clarifies how moving averages can complement trendlines in confirming trend direction. Here's what we've gathered from your explanation:

  • Trendlines in Conjunction with Moving Averages: When employing trendline strategies, adding a moving average, as demonstrated in your screenshot, can provide valuable confluence. The moving average was incorporated as a filter in the context of the three trendline breaks highlighted.
  • Confirmation of Trend Direction: You emphasized the significance of the moving average in confirming the trend direction. In all three scenarios, not only was the price trading below the moving average (indicating a bearish trend), but the moving average sloped downward, further corroborating the trend direction.

This combined approach can increase traders' confidence in their trading signals and decisions. By aligning the information provided by trendlines with that of moving averages, traders can have a more comprehensive understanding of the market's dynamics during trend-following phases. Thank you for sharing this important insight into how moving averages can be used effectively in tandem with trendlines. If you have more strategies or insights to discuss, please share them.


Your advice to use the trading strategies provided as inspiration rather than copying them is crucial for traders' success. Each trader has a unique personality, risk tolerance, and trading style. Using these strategies as a foundation and then adapting and refining them to fit individual preferences and profiles can be a key to profitable trading.

This approach allows traders to personalize their strategies, making them more effective and sustainable in the long run. Thank you for emphasizing the importance of tailoring trading strategies to one's unique needs and characteristics. If you have any more insights or recommendations to share, please feel free to do so.

Written by Sauravsingh

Techpreneur and adept trader, Sauravsingh Tomar seamlessly blends the worlds of technology and finance. With rich experience in Forex and Stock markets, he's not only a trading maven but also a pioneer in innovative digital solutions. Beyond charts and code, Sauravsingh is a passionate mentor, guiding many towards financial and technological success. In his downtime, he's often found exploring new places or immersed in a compelling read.

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