Level 3 - Trading strategies
Trading strategy types
Compare trend-following, range, breakout and mean-reversion ideas.
Trend and breakout strategies
Trend-following strategies try to participate when price keeps moving in one direction. Breakout strategies look for price leaving a range. Both can suffer during choppy markets when price repeatedly reverses.
Range and mean-reversion strategies
Range strategies assume price may continue moving between support and resistance. Mean-reversion strategies assume stretched moves may partially reverse. Both can struggle when a strong trend breaks the range.
Matching strategy to market
No strategy works in every condition. A good lesson is to ask what market behavior the strategy needs, what invalidates it and what costs could damage it.
Practical example
A grid-style range idea may look sensible when price moves sideways between EUR 50 and EUR 60. If price trends down through EUR 50, the same idea can become risky.
Important terms
Lesson quiz
Answer all 3 questions, then submit. You need 3/3 correct to unlock the next lesson.