You may be asking yourself if it’s possible to make money in the markets just by copying what professional traders do. The answer is yes, it is possible – but you need to know which strategies to copy.
In this article, we’re going to take a look at some of the best CFD strategies that pro-traders use and show you how you can replicate their results in your trading.
Copy price action trends
One of the most successful CFD strategies pro-traders use is copying price action trends. It involves looking for clear price patterns forming on the charts and then taking trades accordingly.
For example, if you see a strong uptrend forming on the EUR/USD chart, you would look to enter long (buy) trades. Alternatively, if you see a precise downtrend forming, you would look to enter short (sell) trades. The key with this strategy is only to take trades when a strong trend is in place. If the market is range-bound or choppy, it’s best to stay out of the market altogether.
Use Fibonacci retracement levels.
Another popular CFD strategy pro-traders uses taking trades at Fibonacci retracement levels. It involves looking for pullbacks in trends and then entering trades at key Fibonacci levels.
For example, if the EUR/USD is in an uptrend and pulls back to the 38.2% Fibonacci retracement level, you could enter a long (buy) trade. If the market bounces off this level and continues moving higher, you would profit at the following critical level. This strategy can be used on any time frame, but it’s best to use more extended time frames when trading with Fibonacci levels.
Use technical indicators
Technical indicators are another popular tool that traders use for finding trading opportunities. There are hundreds of different technical indicators available, so it’s crucial to find the ones that work best for you.
Some of the most popular technical indicators include Moving Averages, RSI, MACD and Stochastics. These indicators can be used to identify trends, reversals and other trading opportunities.
Use price action patterns
As we mentioned earlier, one of the best CFD strategies that pro-traders use is copying price action trends. Another strategy that they use is identifying price action patterns.
Price action patterns are formations on the charts that indicate a specific price movement is likely to occur. For example, bullish engulfing patterns are formations that suggest an uptrend is about to start.
There are dozens of price action patterns, so learning as many as possible is essential. This way, you can spot trading opportunities when they occur.
Trade with trendlines
Another popular CFD strategy used by pro-traders is trading with trendlines. It involves drawing trendlines on the charts and then taking trades when prices break out of these lines.
For example, if you see a strong uptrend forming on the EUR/USD chart, you would draw a trendline along with the lower highs. Once the market breaks above this line, you would then enter a long (buy) trade.
You can also use this strategy in reverse for downtrends. Just draw a trendline along with the upper highs and wait for the market to break below it before entering a short (sell) trade.
Use price divergence
Price divergence is another popular CFD strategy that pro-traders use. It involves looking for divergences between the price and a technical indicator.
For example, if the EUR/USD is in an uptrend and the RSI indicates that the markets are overbought, you could enter a short (sell) trade. It would be considered a divergence trade.
There are countless different divergence trades that you can trade, so it’s essential to learn as many as possible.
Trade with breakouts
Breakouts are another popular CFD strategy that pro-traders use. It involves looking for breakouts of crucial levels on the charts and then taking trades accordingly.
For example, if the EUR/USD breaks above the $1.2000 resistance level, you could enter a long (buy) trade. If it breaks below the $1.1000 support level, you could enter a short (sell) trade. Breakouts can occur in any time frame, so it’s essential to be aware of them when trading.
Trade with price trends
One of the most popular CFD strategies that pro-traders use is trading with price trends. It involves looking for solid price trends and then entering trades in the direction of the trend.
For example, if you see the EUR/USD trending higher, you would enter long (buy) trades. If you see the EUR/USD trending lower, you will enter short (sell) trades. It’s important to note that not all trends will result in winning trades, so it’s essential to have a solid trading plan in place.