Trend following is a trading strategy that aims to capitalize on sustained market movements — “trends” — by buying when prices are rising (uptrend) and selling when prices are falling (downtrend). The idea is simple: “The trend is your friend until it ends.”
Mean reversion is a trading strategy based on the idea that prices and returns eventually move back toward their historical average or “mean.” When an asset’s price deviates significantly from its average, it is expected to revert to that mean over time.
The Golden Cross is a bullish trend-following strategy that occurs when a short-term moving average (usually the 50-day) crosses above a long-term moving average (usually the 200-day). It signals a potential shift from a downtrend to an uptrend.
The Time-Weighted Average Price (TWAP) strategy is an algorithmic trading method that executes large buy or sell orders evenly over a specific time period. The goal is to achieve an average execution price close to the market’s time-weighted average price, minimizing market impact.
The Volume-Weighted Average Price (VWAP) strategy is an algorithmic trading technique that executes orders in line with the market’s trading volume. VWAP represents the average price of a security throughout the day, weighted by volume, and is used to ensure execution near the market’s true average price.
The Market Making Strategy is a trading approach where a trader (called a market maker) continuously places buy and sell limit orders around the current market price to provide liquidity. The goal is to profit from the bid–ask spread while maintaining balanced inventory.
The Momentum Trading Strategy is based on the idea that assets that are rising in price tend to keep rising, and assets that are falling tend to keep falling — at least for some time. Traders seek to profit from these continuing trends in market momentum.