5 Effective Trading Strategies during Covid-19
Although there are many trading strategies, not all of them are helpful during the Covid-19 pandemic. Alan Safahi, a leading entrepreneur, advisor, and San Francisco-based startup founder, says that businesses or individuals must choose a strategy that suits their personality type, risk tolerance, and available time. In this post, we will talk about five effective trading strategies during Covid-19. Read on!
Scalping is an effective short-term trading strategy for individuals and businesses. According to Alan Safahi of Orinda, CA it involves taking multiple profits of smaller sizes on trading positions within a short period.
Scalpers typically enter and exit training within a matter of seconds or minutes, meaning they need quick reaction times. If you choose this strategy, make sure you monitor price charges to predict future exchange rates and their movements.
2. Day Trading:
Day trading is an effective strategy for traders during the Covid-19 pandemic. It is a short-term strategy followed by traders during a specific trading session. According to Safahi, day traders usually avoid taking overnight positions, meaning they close out their traders each day. The purpose is to decrease exposure to the trading market movements.
Moreover, you must use trading plans based on short-term charts and their technical analysis to know the intraday price action. Focus on the breakout trading because Safahi’s research shows that it is the most popular one during Covid-19.
3. Momentum Trading:
Momentum trading, also known as swing trading, enables you to plan a medium-term strategy to identify, examine, and evaluate more market moves. If you want successful momentum trading, make sure you trade both with major trends and against them, especially when the market is correcting. Thus, you will hold overnight positions.
The relative strength index (RSI), moving average convergence divergence (MACD), and histogram are commonly used indicators in momentum trading. Moreover, you should start with at least $10,000. You may end up risking each trade if you fall below $10,000.
4. Trend Trading:
Unlike other trading strategies, trend trading is a long-term strategy used in the forex market. It involves focusing on the market’s directional movement or prevailing trends for a particular currency pair. Safahi recommends traders to purchase on pullbacks in up trends and sell on rallies on downtrends.
Once you have taken a position in the trend direction, hold onto it until the trend starts reversing or the market reaches its objective. During Covid-19, Safahi suggests traders focus on more technical analysis indicators, such as the average directional movement indicator (ADX). However, you can also focus on moving averages to smooth out the price action. That way, you can identify trends and watch for crossovers in the market.
5. News Trading:
You can use news trading strategies if you have enough budget and a solid plan for risk management. Bear in mind that news trading strategies are not suitable for beginners during the Covid-19 pandemic.
News trading strategies are usually based on fundamental and technical analysis and benefit from volatility seen in the market quickly after news releases. Alan Safahi recommends monitoring economic calendars for data releases and watching the forex market closely to identify support and resistance levels before the event.
The purpose is to analyze the results and react quickly after the event. Furthermore, you have to maintain discipline during currency positions management to streamline your strategy and take profits orders in the forex market.
The Covid-19 pandemic has hit hard the entire world in terms of health, business, and economy. The unpredictable lockdowns, surging cases, and disrupted supply chains have significantly affected the business world, including trading markets. However, the five strategies given above can help you thrive in the Covid-19 era trading if you use them correctly. Until Next Time!
About the author
Alan Safahi is an Iranian-American entrepreneur and six-time startup founder with over 30 years’ experience in the information technology, telecommunications and financial services industries.