The art of money: Unconventional trading strategies you haven't heard of

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Published: Tue 19 Dec 2023, 10:43 AM

Last updated: Tue 19 Dec 2023, 11:13 AM

Limited resources and unlimited wants are the primary economic concerns driving commerce across the globe. Trading resources in the right places is a time-tested and effective way to amplify wealth.

By Ivy Samboh

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People have been investing their wealth and amplifying its value for ages. However, what worked five years ago might not be as effective today, thanks to the evolving nature of markets. A diligent and well-thought-out approach to creating a unique trading strategy can still help you drive better returns.

But with almost every trader following the same route, how do you stand out?

It’s simple: You go beyond traditional to unconventional trading strategies.

But what are unconventional trading strategies?

As the name suggests, alternative trading strategies go beyond general demand-supply conviction. These strategies take a different approach to the buy-and-hold aspect, focusing on maximizing returns with the most unique trade strategies.

Here are a few key characteristics that define unconventional trading strategies:

● These strategies scout for the most unique opportunities in the market, ones that aren’t common among other traders.

● They are sophisticated and actionable trading strategies with the potential to transform your approach and supercharge trading success.

● They correlate poorly with traditional trading techniques, which means they do not always have a similar approach to traditional tools or approaches.

Alternative trading contains many unique investment characteristics, all of which are different from each other. Let’s uncover more about these strategies in the following section.

Unconventional trading strategies to keep you ahead of the game

Pairing unrelated assets

Pairing unrelated assets in a trading strategy is one of the most unorthodox. This method entails locating two seemingly unrelated instruments that have a historical association.

The relationship between the two asset classes could play a key role in generating better returns. Wonder how? Traders could benefit from convergences or divergences between two asset classes by researching their patterns and correlations, bringing up new trading possibilities.

Pattern trading beyond charts

While chart patterns are often the focus of technical analysis, traders might look for patterns beyond price charts. They can, for example, look for trends in market sentiment using information around the web, news releases, or social media.

While acquiring such amounts of data can be challenging for an individual, you can use international trading platforms like Olymp Trade to determine market trends and predict your next move. What’s more? Traders can also acquire information unavailable through regular chart analysis by finding and using these patterns.

Active investing

Seasonal trading studies reoccurring trends or patterns that arise at certain seasons of the year. This unconventional trade strategy entails using market timing to maximize the value of investments.

Traders can profit from predicted market changes by knowing previous seasonal trends and their likely influence on pricing. This technique can be especially beneficial in the agriculture, retail, and tourism industries.

Behavioral finance

Incorporating behavioural finance knowledge can offer traders a distinct advantage. Traders may make educated judgments and even profit from the illogical conduct of others by researching and comprehending psychological biases that impact market participants.

Two examples are exploiting herd mentality or profiting from fear and greed in the market. However, exploring the concept of behavioural finance would require a proper study of market conditions and involve a high-risk situation.

News trading

Although news trading is a typical trade approach, adding a twist may make it unique. Instead of focusing just on the immediate reaction to news releases, traders might investigate the secondary repercussions and long-term ramifications.

For instance, if a fire broke out in a jungle in Africa, rather than trading the stocks involved in wildlife, go for the other companies involved in sorting it out. Or the ones carrying rescue and relief operations. Traders can position themselves ahead of the curve by comprehending the more significant implications and anticipating market movements.

Stomp out downside moves

The stomp-out downside move strategy is the final effective trading strategy you need in your playbook! Every trader strives to minimize risks by using the stop-loss limits to prevent unnecessary losses.

In this unconventional trade method, you need to set a trigger price slightly above your purchase price. If the financial instrument's price falls below the trigger price, you must sell it immediately without further consideration.

For instance, suppose you buy an asset for $3, then you can set the trigger price at $2.8. This way, when the instrument's price falls below this mark, you can easily sell it while staying break-even.

Stomping out downside moves is a relatively less-used strategy, as access to information is key to success.

Right entry = Great returns

Making the proper entry into the market at the right time is far more challenging than many might imagine. But thankfully, taking the right trading strategy can make things more profitable while minimizing risks.

You can easily leverage these strategies if you have a clear risk-reward idea and understand your trading. These strategies will help drive amplified returns with minimal risks.

Ivy Samboh is a trading analyst.

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