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Risk Warning: CFDs are complex instruments and carry a high risk of rapid money loss due to leverage. 72% of retail investor accounts lose money when trading CFDs with this provider. Consider carefully whether you understand how CFDs work and if you can afford the high risk of losing your money.

Trading strategy

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Three Methods Strategy

1. Trend-Following Strategy

Objective: Capture profits by trading with the trend.
Tools: Moving Averages, MACD, ADX.
Buy Signal: Shorter MA crosses above longer MA (bullish signal).
Sell Signal: Shorter MA crosses below longer MA (bearish signal).
Example: 50-day and 200-day moving averages (Golden Cross and Death Cross).

2. Range-Bound (Mean Reversion) Strategy

Objective: Profit within a range by buying near support and selling near resistance.
Tools: Bollinger Bands, RSI, support and resistance levels.
Buy Signal: Price near support level or lower Bollinger Band.
Sell Signal: Price near resistance level or upper Bollinger Band.
Example: Place stop-loss outside range to avoid losses if a breakout occurs.

3. Reversal Strategy

Objective: Capture profits from trend reversals.
Tools: Candlestick patterns, divergence indicators, Fibonacci levels.
Buy Signal: Bullish reversal pattern (e.g., hammer) with bullish divergence.
Sell Signal: Bearish reversal pattern (e.g., shooting star) with bearish divergence.
Example: Place stop-loss below low of bullish pattern or above high of bearish pattern.

Combining the Three Methods

Identify Market Conditions: Use ADX and Bollinger Bands to determine if the market is trending or ranging.
Filter Signals: Confirm with secondary indicators to improve accuracy.
Risk Management: Set stop-losses and position sizes based on market conditions.

Pros

Versatile: Adaptable to trending, ranging, and reversing markets.
Improved Accuracy: Multiple methods reduce false signals.
Well-Rounded: Combines trend, range, and reversal techniques.

Cons

Complexity: Requires knowledge of multiple strategies and indicators.
Higher Monitoring: Demands regular analysis and adjustments.
Potential Overtrading: Risk of overtrading if strategies aren’t managed carefully.