Trading Strategies

Trading 技能 — Complete Reference Purpose

Comprehensive trading knowledge base covering fundamentals, technicals, strategies, back测试, and risk management. Use when building trading 应用s, evaluating strategies, or making trading decisions.

• TRADING STYLES

Scalping Hold: seconds to minutes Goal: profit from tiny price movements Pros: many opportunities, reduced exposure to big moves Cons: high transaction costs, stressful, tiny profit per trade Best for: highly liquid markets with tight spreads Day Trading Hold: minutes to hours (close all by market close) Goal: profit from intraday price movements Pros: no overnight risk, high profit potential per trade Cons: high risk, emotional pressure, costs 添加 up Best for: volatile stocks with clear intraday patterns Swing Trading Hold: days to months Goal: catch short-to-intermediate moves Pros: lower costs, more analysis time, less stressful Cons: overnight risk, may miss long-term moves Best for: trending markets with pullbacks Position Trading Hold: months to years Goal: profit from major long-term trends Pros: lowest costs, highest profit potential, most flexibility Cons: cAPItal tied up, exposed to macro 事件 Best for: fundamentally strong companies in sector uptrends

• FUNDAMENTAL ANALYSIS

Key 指标

P/E Ratio (Price-to-Earnings)

Formula: 分享 Price / Earnings Per 分享 S&P 500 average: ~30 (as of late 2025) Low (<15): potentially undervalued or troubled High (>30): potentially overvalued or high growth expected Compare WITHIN same industry only Forward P/E uses projected earnings; TrAIling P/E uses last 12 months

P/B Ratio (Price-to-Book)

Formula: 分享 Price / Book Value Per 分享 Book Value = total as设置s - intangible as设置s - liabilities P/B < 1 = trading below as设置 value (potential bargAIn) Most useful for cAPItal-heavy industries (banks, manufacturing)

Debt-to-Equity Ratio

Formula: Total Liabilities / 分享holders' Equity High = heavy debt reliance (risky in downturns) Compare within industry — some sectors carry more debt naturally

Revenue Growth Rate

Year-over-year revenue increase Consistent > spiky Accelerating growth rate = strongest 签名al

Free Cash Flow (FCF)

Cash 生成d after cAPItal expenditures Positive FCF = real cash generation, not accounting tricks FCF Yield = FCF / Market Cap (higher = better value)

EPS Growth (Earnings Per 分享)

Consistent EPS growth over 3-5 years = strong 签名al 检查 质量: operations vs one-time 事件

Return on Equity (ROE)

Formula: Net Income / 分享holders' Equity ROE > 15% = generally good management efficiency

Dividend Yield & Payout Ratio

Yield = Annual Dividend / 分享 Price Payout = Dividends / Net Income Payout > 80% may be unsustAInable

• TECHNICAL INDICATORS

RSI (Relative Strength 索引) Formula: RSI = 100 - (100 / (1 + (Avg GAIn / Avg Loss))) over 14 periods 扩展: 0-100 >70 = Overbought (potential sell) <30 = Oversold (potential buy) Strengths: Simple, effective in ranging markets Weaknesses: Stays >70 for extended periods in strong uptrends — don't auto-sell RSI Divergence: Price makes new high but RSI makes lower high = bearish (momentum weakening) Swing Rejection: RSI crosses 30 upward → dips but stays above 30 → breaks prior high = bullish entry Best in: Ranging/sideways markets. Combine with ADX to 过滤器. MACD (Moving Average Convergence Divergence) MACD Line = 12-period EMA - 26-period EMA 签名al Line = 9-period EMA of MACD Line Histogram = MACD Line - 签名al Line Buy: MACD crosses ABOVE 签名al line Sell: MACD crosses BELOW 签名al line Divergence: MACD rising while price falling = potential reversal Strengths: Good trend-following indicator Weaknesses: Lagging, many false positives in sideways markets Best combined with ADX — only trust MACD 签名als when ADX > 25 (confirming trend) Bollinger Bands Middle Band = 20-day SMA Upper Band = SMA + 2 standard deviations Lower Band = SMA - 2 standard deviations 95% of price action stays within bands Squeeze: Bands narrow → low volatility → breakout imminent (direction unknown) Bollinger Bounce: Price off lower band toward middle = buy; off upper toward middle = sell Breakout: Price outside bands with volume = trend continuation Strengths: Visual, adapts to volatility Weaknesses: Secondary indicator — always confirm with RSI/MACD 创建d by John Bollinger in the 1980s Moving Averages SMA (Simple): Equal weight all periods EMA (Exponential): More weight on recent prices (faster reaction) Key periods: 5, 9, 20, 50, 100, 200 day Golden Cross: 50-day crosses ABOVE 200-day = strong bullish Death Cross: 50-day crosses BELOW 200-day = strong bearish MAs act as dynamic support/resistance levels Use longer MAs for volatile stocks to avoid false 签名als Volume Confirms price movements Price up + high volume = strong bullish Price up + low volume = weak rally, likely to reverse Price down + high volume = strong selling pressure Price down + low volume = lack of selling conviction 60-80% of dAIly volume is algorithmic Ichimoku Cloud