First 5 trading strategies every beginner should practise
Reading time: 10 minutes
The markets don’t move in a predictable, straight line. They can be even more unpredictable when geopolitical or economic uncertainty rises. This could be seen in the sudden spikes in the CBOE VIX (often called ‘fear gauge’ by Wall Street traders) in the first half of 2026, when the US-Iran conflict grabbed the headlines. As a beginner trader, it’s easy to be overwhelmed during such times. But it’s also an opportunity to make the most of your demo account to practise trading under different market environments, learning to adapt your trading strategy to changing conditions. Practising can also help you learn how to keep emotions under control and prevent fear or greed from tainting your trading decisions.
Here are five trade setups you can practise to broaden your skills before entering the live markets.
1. Trend trading
The core philosophy of this setup is simple: trade along the path of least resistance. Instead of guessing where a market will turn around, you might look to align your capital with the dominant market momentum.
Trend trading is a strategy that capitalises on extended price movements in a single direction. Markets exist in one of three states: uptrend, downtrend, or sideways consolidation. An uptrend is characterised by higher highs and higher lows, while a downtrend sees lower highs and lower lows. Trend traders usually wait for pullbacks in an uptrend to buy or rallies in a downtrend to sell. They ride the trend until technical analysis signals that it may have ended.
How to practise
Popular technical indicators used for this setup are the 50-period and 200-period simple moving averages (SMA), which helps identify trend direction. You can draw manual trendlines across swing lows (in an uptrend) or swing highs (in a downtrend) to visualise the slope of price action.
You can use a daily or 4-hour chart to identify an asset that is trading above both the 50 SMA and 200 SMA. Draw a trendline that connects at least three successive higher lows. You would then wait for the price to pull back to your trendline or the 50 SMA. Many traders enter a long position when they see a bullish rejection candlestick pattern (like a hammer or bullish engulfing pattern) at that level. Stop-loss is often set just below the previous structural higher low.
2. Support and resistance
Prices don’t always move randomly. They often react to historical levels where supply and demand previously fell out of balance. These horizontal boundaries create the basic floor and ceiling for price action.
Support is a price level at which buying interest is stronger than the selling pressure. It acts as a floor for the price. Resistance is a price level where selling interest overcomes buying pressure, with the price acting as a ceiling. When the price approaches these zones, it often either pauses or reverses. Support and resistance trading involves buying when the price bounces off a support floor and selling when the price drops back from a resistance ceiling.
How to practise
You can draw manual horizontal lines to mark major turning points on your chart. Add the Relative Strength Index (RSI) set to a 14-period window. The RSI acts as a momentum filter, with an RSI reading above 70 often indicating an overbought condition near resistance (price may fall), while a reading below 30 may signal an oversold condition at support (price may rise).
Here, you can use a 1-hour or 4-hour chart to identify clear price peaks and troughs. To make it visually clearer, draw horizontal lines across zones where the price reversed directions at least twice. Then, wait for the price to trade back into one of these zones. If the price hits the support and RSI drops below 30, traders might look to open a long position. The stop loss is often placed a few pips slightly below the support to protect against sudden downside swings. Your take-profit order can be just below the next major resistance level.
3. Swing trading
Day trading often requires constant market monitoring and quick decision-making. If you feel this pace is too intense and could lead to errors, swing trading could be a slower, maybe even calmer, alternative. It is a multi-day approach that aims to capture large price swings within a broader market cycle. Positions typically remain open from a few days to several weeks. A swing trader analyses market shifts, identifying potential entry points and holding the position for days or even weeks to catch the core of the market’s move.
How to practise
The 20-period exponential moving average (EMA) is commonly combined with Moving Average Convergence Divergence (MACD) for this trading strategy. The 20 EMA acts as a dynamic guide, while the MACD helps traders identify underlying momentum shifts.
Traders tend to use daily charts to smooth out intraday noise and identify an asset showing a clear directional trend. . Wait for the MACD to cross above its zero line. This signals that upward momentum may be expanding. A popular entry is when the daily candle closes above the 20 EMA. Since you are holding positions overnight, check your platform’s swap rates or overnight charges to factor in holding costs. Beginner traders usually keep position sizes small to reduce the risk related to overnight price fluctuations.
4. Moving average crossover
Discipline can be difficult to maintain when real capital is on the line. Mechanical execution systems can help by reducing emotional bias from your entry decisions.
A moving average crossover is often used to identify potential buy and sell signals when two different moving averages intersect. It uses a fast-moving average (short time horizon) and a slow-moving one (longer time horizon). When the fast average crosses above the slow one, it may indicate expanding upward momentum, and vice versa.
How to practise
The most commonly used lines are the 9-period EMA as the fast line and the 21-period EMA as the slow line. EMAs are popular here because they prioritise recent price data, reducing the lag inherent in standard simple moving averages.
For this set-up, choose a liquid market, such as a major currency pair or large-cap stock index, on a 1-hour chart and watch the lines closely during active trading sessions. When the 9 EMA crosses above the 21 EMA from below, traders see it as a signal to open a long position on the candle close. Conversely, if the 9 EMA crosses below the 21 EMA from above, a short position is usually opened. The position might need to be actively managed, where you exit the trade the moment the two moving averages cross back in the opposite direction.
Remember to track your trades closely in your trading journal to check how often this system catches sustained trends versus choppy, flat markets.
5. Breakout trading
When markets compress into tight ranges, energy builds up. Breakout trading aims to capture the explosive price move that occurs when that energy is released.
The breakout trading strategy involves entering a position the moment an asset’s price forces its way past a well-defined consolidation range or chart pattern. When a price breaches a key resistance line or breaks below a support level, it often triggers stop losses and attracts momentum algorithms. This sudden influx of orders leads to rapid price swings, creating trading opportunities.
How to practise
Bollinger Bands are used to practise trading breakouts, especially the 20-period, with the upper and lower bands at a distance of two standard deviations from the middle band. The Average True Range (ATR) indicator can help you monitor baseline market volatility.
When Bollinger Bands move closer together, it indicates low volatility, sometimes referred to as a ‘squeeze’. You can draw horizontal boundaries around this narrow price corridor. Traders usually place a buy-stop order slightly above resistance, or a sell-stop order just below support. This way, when the price breaks out, either above resistance or below support, one of the orders gets triggered. ATR can be used to calculate your take-profit target, in-line with the asset's current volatility profile.
However, remember that false breakouts occur frequently. So, use stop losses to protect your capital. A common approach is to place the stop in the middle of the previous consolidation zone.
Developing a disciplined learning routine
To turn these trading setups into an execution system, approach your trading practise with discipline and treat your demo account with the same respect you would apply to an account funded with real money. Avoid impulsive position sizing, over-trading, or ignoring your stop-loss rules simply because the capital is virtual. In addition, log every outcome in your trading journal, including entry prices, exit levels, execution times and the emotions you felt during the trade. This step-by-step process can help you build your strategy, sharpens chart pattern recognition and teach you how to keep emotions from impacting your decisions.
As you learn different trading setups such as moving average crossovers, breakouts, and volatility-based strategies, it is also important to understand the instruments used to access these opportunities. One of the most common instruments in trading is the CFD (Contract for Difference).
CFDs allow you to choose your position size and timeframe, as you do not need to own the underlying asset to speculate on its price movements. Instead, you are trading a derivative instrument that reflects the price difference of an asset between the time a contract is opened and when it is closed.
It is important to note that CFDs are leveraged products, which means both potential gains and losses are magnified. As a result, risk management is essential, since losses can exceed your initial margin if the market moves sharply against your position.
Start your trading journey with FP Markets
Theory alone cannot help you navigate the markets. You need consistent, structured practise to bridge the gap between learning and actual execution. To build sustainable skills, you choose a platform that offers real-time market data, fast order execution and robust technical charting suites.
At FP Markets, we support your trading journey at every milestone with educational resources, a wide variety of trading tools, powerful platforms and a wide array of CFD instruments, including major, minor and exotic currency pairs, commodities, stocks, indices and more. Build your confidence, refine your execution and learn how to protect your capital. Open an account today with FP Markets.
