Trading can be really fun, but if you want to make a lasting positive impact on your trading account, you need a real edge. A single twig will easily snap. A single trading strategy can easily go against you. But tie a bundle of sticks together and they can bocome unbreakable. Apply the same logic to stock market trading and you get compound trading.

So, I heard you like to trade fallers. Buying shares that have fallen a lot on the expectation that the share price rallies back. If you love this strategy, my colleague Mike has written a blog just for you. Head on over, if you fancy something “cheap and cheerful”.

But what if you want to take the next step? You already know that “cheap” doesn’t necessarily mean “attractive”. But how to pick a real gold star among fallers?

In my experience, the best trades come from combining multiple complementary strategies. So, a company’s share price fell heavily. An attractive buy? Maybe, maybe not. What if it fell and bounced off a support line that has held up multiple times? A stronger, more convincing trading idea.

What if the same stock fell substantially, bounced off support, then displayed momentum and found resistance at the ceiling of a range? That’s four separate trading strategies from a single stock. No guarantee of success, of course, but a much more reliable approach than simply taking a wild punt after a big decline.

Here’s another combination. Stocks that rally sometimes have enough momentum to break above previous highs. And a breakout means thay are no longer constained by resistance. Which can allow them to continue even higher.

Here’s an example. Last week (11 Feb) we highlighted Rolls-Royce shares trading a breakout above 901p January highs. Following the breakout, Rolls-Royce shares added another 5% at which point we highlighted strong share price momentum (14 Feb). The shares are +10% since the breakout and +4% since we highlighed momentum.

Sure, there’s a bigger gain using just one strategy, but what if the shares tested a breakout and then turned lower? By waiting for the second indicator, you make sure the trade is more solid, more reliable. Less chance you get it wrong.

And remember, it’s not an all-or-nothing situation. You can trade in tranches. Fund a CFD account with £10,000. If you see an attractive breakout, a bounce off support, or a range, go ahead and trade with a portion of your available funds. When you see a secondary strategy materialise, you can trade another tranche. The result is a compound trading opportunity. No fear of missing out, and you never expose yourself unnecessarily.

Still not convinced? Here’s another high-profile example. Aston Martin shares hit a low on 8 Feb, bouncing off a mid-December support zone and went on to add over 10% in just a week. From faller, into support, into momentum. Compound trading.

Attractive numbers, but don’t feel like you missed out on everything. Today, Aston Martin is testing a breakout above November falling highs at 1210p. Should it confirm, the shares could be going all the way back  to January highs. That’s another 10% upside. Watch this space for more developments.

Actually, why wait and miss out on great opportunities? Let Accendo Markets alert you, daily, via to our research Gold Pass, about the latest attractive breakouts, momentums, ranges and bounces off support.

Don’t just watch this space. Trade this space.

Chris Peters, Trader, 22 February 2019