Starting your trading journey on Deriv can be both exciting and overwhelming. With so many markets, instruments, and strategies to choose from, beginners often struggle to find a clear path forward. This guide presents 10 proven trading strategies specifically designed for beginners on the Deriv platform, helping you build a solid foundation for your trading career.
Why Trading Strategies Matter for Beginners
Before diving into specific strategies, it's important to understand why having a structured approach is crucial for new traders:
- Strategies provide a systematic framework for making trading decisions
- They help remove emotional bias from your trading
- Following proven strategies can significantly reduce the learning curve
- They establish good trading habits from the beginning
- Strategies give you measurable results to track your progress
Important Note for Beginners
Strategy #1: Simple Moving Average Crossover
The moving average crossover is one of the most beginner-friendly strategies for Deriv trading. It uses two moving averages to identify potential trend changes and generate trading signals.
How It Works:
Setup
Add two Simple Moving Average (SMA) indicators to your chart: a fast SMA (10-period) and a slow SMA (30-period).
Buy Signal
Enter a buy position when the fast SMA crosses above the slow SMA, indicating a potential uptrend.
Sell Signal
Enter a sell position when the fast SMA crosses below the slow SMA, indicating a potential downtrend.
Best For
This strategy works well on all Deriv markets but is particularly effective for Volatility Indices and forex pairs.
Strategy #2: Support and Resistance Trading
Support and resistance levels are price areas where the market has historically reversed direction. These levels can provide excellent entry and exit points for beginners.
How It Works:
Identify Levels
Look for price levels where the market has bounced multiple times. Horizontal lines can be drawn to mark these areas.
Buy at Support
Enter a buy position when the price approaches a support level and shows signs of bouncing (like a bullish candlestick pattern).
Sell at Resistance
Enter a sell position when the price approaches a resistance level and shows signs of reversing (like a bearish candlestick pattern).
Best For
This strategy is excellent for Boom and Crash indices and works well on all timeframes.
Strategy #3: Bollinger Bands Squeeze
Bollinger Bands are volatility indicators that can help beginners identify potential breakout opportunities when markets are consolidating.
How It Works:
Setup
Add Bollinger Bands (20-period, 2 standard deviations) to your chart.
Identify the Squeeze
Look for periods when the bands narrow significantly, indicating low volatility and a potential upcoming breakout.
Trade the Breakout
When the price breaks out of the narrow bands, enter a position in the direction of the breakout.
Best For
This strategy works particularly well for Volatility 75 Index and other highly volatile markets.
Strategy #4: RSI Divergence
RSI (Relative Strength Index) divergence is a powerful strategy that can help beginners identify potential trend reversals before they happen.
How It Works:
Setup
Add the RSI indicator (14-period) to your chart.
Bullish Divergence
Look for situations where the price makes a lower low, but the RSI makes a higher low. This suggests a potential upward reversal.
Bearish Divergence
Look for situations where the price makes a higher high, but the RSI makes a lower high. This suggests a potential downward reversal.
Best For
This strategy works well across all Deriv markets but is particularly effective for technical analysis of Volatility Indices.
Strategy #5: Breakout Trading with Trendlines
Trendline breakouts offer beginners a visual way to identify when a market is changing direction, providing clear entry signals.
How It Works:
Draw Trendlines
Connect at least two swing lows to draw an uptrend line, or two swing highs to draw a downtrend line.
Wait for the Break
Monitor the price action until it breaks through the trendline with a decisive candle close beyond the line.
Enter the Trade
Enter a position in the direction of the breakout. For example, if an uptrend line is broken downward, enter a sell position.
Best For
This strategy is excellent for breakout trading on all Deriv markets, especially during volatile market conditions.
Want to Practice These Strategies?
Sign up for a free Deriv demo account and test these strategies without risking real money.
Create Free AccountStrategy #6: The 1-2-3 Pattern
The 1-2-3 pattern is a simple yet effective reversal strategy that helps beginners identify potential turning points in the market.
How It Works:
Identify the Pattern
Look for a significant high or low (point 1), followed by a retracement (point 2), and then a failed attempt to break the original high/low (point 3).
Entry Point
Enter a position when the price breaks beyond point 2 in the direction of the new trend.
Stop Loss
Place a stop loss just beyond point 1 to limit potential losses if the pattern fails.
Best For
This pattern works well on Boom and Crash market cycles and can be applied to any timeframe.
Strategy #7: Multiple Timeframe Analysis
Multiple timeframe analysis helps beginners gain a more comprehensive view of the market by analyzing different timeframes simultaneously.
How It Works:
Select Timeframes
Choose three timeframes: a higher timeframe for trend direction, a middle timeframe for entry signals, and a lower timeframe for precise entries.
Identify the Main Trend
Use the higher timeframe to determine the overall market direction.
Find Entry Opportunities
Look for pullbacks or continuation patterns on the middle timeframe that align with the main trend.
Fine-Tune Entries
Use the lower timeframe to pinpoint precise entry points with better risk-reward ratios.
Best For
This approach works well for all markets but is particularly useful for Volatility 75 price action trading.
Strategy #8: Price Action with Candlestick Patterns
Candlestick patterns provide visual cues about market sentiment and potential reversals, making them ideal for beginners learning to read the market.
How It Works:
Learn Key Patterns
Familiarize yourself with basic reversal patterns like Doji, Hammer, Engulfing, and Morning/Evening Star.
Identify Support/Resistance
Look for these patterns at key support and resistance levels where they have more significance.
Confirm with Volume
Use volume indicators to confirm the strength of the pattern. Higher volume during pattern formation suggests stronger signals.
Best For
This strategy is excellent for all Deriv markets and works well when combined with trend following strategies.
Strategy #9: Simple Automated Bot Strategy
For beginners interested in automated trading, Deriv Bot offers a user-friendly way to implement simple strategies without coding knowledge.
How It Works:
Access Deriv Bot
Log in to your Deriv account and navigate to Deriv Bot. For detailed instructions, see our Deriv Bot Guide.
Use Simple Martingale Strategy
Start with a basic Martingale strategy that increases position size after losses to recover previous losses plus generate a small profit.
Set Conservative Parameters
Use small position sizes and limit the maximum number of Martingale steps to manage risk effectively.
Best For
This approach is ideal for beginners who want to explore automated trading vs manual trading with minimal time commitment.
Risk Warning for Martingale Strategies
Strategy #10: News Trading
News trading allows beginners to capitalize on market volatility following major economic announcements and news events.
How It Works:
Track Economic Calendar
Use an economic calendar to identify upcoming high-impact news events that could affect your chosen markets.
Straddle Strategy
For beginners, the safest approach is to wait for the news release and then trade in the direction of the initial market movement.
Use Wider Stops
During news events, markets can be extremely volatile. Use wider stop losses to avoid being stopped out by price spikes.
Best For
This strategy works best for forex pairs and commodities on Deriv, rather than synthetic indices which are not affected by economic news.
Essential Risk Management for Beginners
No trading strategy is complete without proper risk management. Here are essential risk management principles every beginner should follow:
The 1% Rule
Never risk more than 1% of your trading capital on a single trade. This ensures that a string of losses won't significantly deplete your account.
Always Use Stop Losses
Place a stop loss on every trade to define your maximum acceptable loss before entering the market.
Positive Risk-Reward Ratio
Aim for a minimum risk-reward ratio of 1:2, meaning your potential profit should be at least twice your potential loss.
Keep a Trading Journal
Document all your trades, including entry/exit points, strategy used, and emotions during the trade. This helps identify patterns and improve your trading over time.
For more detailed guidance on protecting your capital, check out our comprehensive guide on risk management strategies for Deriv traders.
Ready to Start Trading?
Sign up for Deriv today and put these beginner-friendly strategies into practice.
Create Free AccountConclusion
These 10 strategies provide a solid foundation for beginners starting their trading journey on Deriv. Remember that successful trading is a marathon, not a sprint. Take the time to practice each strategy on a demo account before risking real money, and always prioritize risk management over potential profits.
As you gain experience, you can combine elements from different strategies to create your own personalized approach that suits your trading style, risk tolerance, and schedule. The most successful traders are those who continuously learn, adapt, and refine their strategies over time.
For more advanced trading techniques, explore our guides on Volatility Indices, Boom and Crash patterns, and automated trading with Deriv Bot.
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