Ultimate Day Trading Strategies Compilation

Day trading strategies are usually essential when one decides to capitalize on small price movements that occur frequently. In order to predict future price movements, consistent and effective strategies make use of patterns, indicators and charts while also relying on in-depth technical analysis. In this article, we provide you with a thorough breakdown of all trading strategies, from the beginner to advanced level. You will also get to learn about automated strategies as well as those that are limited to specific assets.

You will also learn about regional differences that you should keep in mind as you trade as well. Furthermore, we will give you some pointers to set you in the right direction. In the final stage, however, you will need to settle on a day trading strategy that will suit your needs perfectly.

Beginner Trading Strategies

Make sure to first understand the basic principles of a day trading strategy before you decide to delve deeper into the more complex indicators. A common misconception is that you need a highly complex trading strategy for you to succeed. The truth is, however, that the more the straightforward a strategy is, the more effective it will be.

The Basics

The following elements will be valuable to your strategy:

● Money Management — Decide on the amount that you are willing to risk before you even start. In most cases, you will only need to put up to 2% of your capital. If you expect any profits to come in, you need to be ready to take risks.

● Time Management — Trading requires you to sacrifice your time. This could mean spending most of your days on the market.

● Start Small — While you’re still in the learning process, it would be better to stick to a maximum of three stocks a day. It’s not worth it if you lose money by trading too much while you could just perfect a few trades.

● Education — Besides understanding how the market works, you also need to have information at your fingertips. Make sure that you’re aware of all matters that are likely to affect your asset, for instance, a shift in the economic policy. All the information needed for this is available online.

● Consistency — Keeping emotions at bay while trading is not always easy. However, you need to understand that you cannot allow your nerves, greed and fear to run you. Instead, rely on your strategy, math, and logic.

● Timing — The market is always volatile in the opening hours. Some experienced players might be able to read the patterns and make profits, but you need to be patient. You still have a whole day ahead of you after all.

Components That Every Strategy Needs

There are three components that you need to be aware of regardless of whether you’re a beginner or an experienced trader. They are volume, liquidity and volatility. You need to choose the right stock if you want to make money on small price movements. The decision is made easier by these three components.

● Liquidity — This component gives you the ability to enter and exit trades swiftly at a favorable price. For instance, strategies for liquid commodity will major on products such as natural gas, crude oil, and gold.

● Volatility — This informs you of your range for potential profits. The more volatile an asset is the more the profit or loss you will make. The crypto market is well known for its volatility.

● Volume — This is the exact measurement of the number of times that a specific stock has been traded over a certain period of time. This is also referred to as ‘average daily trading volume’ by day traders. If the volume is high, it indicates that there’s a lot of interest in the asset. When the volume rises, it’s an indication that the price is about to jump, either up or down.

5 Day Trading Strategies

1. Breakout

Breakout strategies usually surface when the price goes beyond a certain point in your chart, as the volume increases. Once the security or asset breaks out, the day trader immediately enters a long position. On the other hand, the day trader will enter a short position if the stock goes below support.

The volatility of an asset or security usually increases once it breaks through the specified price barrier. Prices are also set to move in a direction which follows the breakout.

You need to have the right trading instrument. Remember the resistance levels and the asset’s support when doing this. The validity and importance of the prices increase when they hit these points.

2. Scalping

This is one of the most common strategies. It’s particularly important in Forex trading in which is mainly used when one intends to capitalize on small changes in price. The strategy is mainly driven by quantity. One is always on the lookout for positive changes in the price. This method is fast paced and it’s very exciting. However, it might also prove to be very risky. You also need to get rid of the low risk vs. reward ratio.

Keep an eye out for the volatile trades and the appealing liquidity. You need to also be sharp on your timing. There’s no time to wait for the market. You need to clear all losing trades as fast as possible.

3. Momentum

The strategy is most popular to beginners. It involves making moves based on news sources and using high volumes to identify substantial trading moves. There are always lots of opportunities since there’s always a stock that moves at least 20–30% each day. All you have to do is stick to your position until you see signs of a change in direction, after which you make your move.

You can also fade the drop in price. Through this route, the target of your price is a soon as there’s a drop in volume.

If correctly executed, this strategy is very simple and incredibly effective. You must, however, be informed on the upcoming news and announcements on earning. A few seconds of trading will make the difference in your profits at the end of the day.

4. Reversal

Despite the fact that this strategy has become highly contested, it’s used all over the world. It has also been said to be a dangerous tactic for beginners. Other names include mean reversion strategy, pull back trending and trend trading.

This is a strategy that works against nature since one aims to trade against the trends. You need to have a very sharp eye for possible pullbacks and their strengths. For this to happen, you need to have high knowledge of the market and experience.

A unique case of reverse trading is the ‘daily pivot’ strategy. Its focus is mainly the high pullbacks and the daily lows.

5. Using Pivot Points

If you want to identify and act on resistance levels and/or critical support, then a day trading pivot point is the strategy for you. It’s highly effective in the Forex market. It can also be used to identify a suitable point of entry by range-bound traders and also to locate key levels that are needed for breaking by trend and breakout traders. Once these levels break, the move is then considered a breakout.

Limit Your Losses

This is especially important if you’re using margin. The day traders usually face higher requirements. Your vulnerability to sharp price movements is high if you’re trading on the margin. We know that the potential for profit is extremely high but you also stand to make great losses. Using stop-losses can protect you from this, fortunately.

The stop-loss controls your risk. In long positions, you can set a stop-loss just below a recent low and for short positions you can just set it above a recent high. It’s also possible to make it dependent on the volatility of an asset.

For instance, say a stock price moves by just 0.05 USD per minute. You can set your stop loss at 0.15 USD. This allows it to swing, hoping that it will do so in the expected direction.

A strategy whose popularity has grown is setting up two stop-losses. First, you set a physical stop-loss at a specific level in price. This is usually the highest amount in capital that you can afford to lose. The second is a mental stop-loss. You will place this at a strategic point where there’s a breach of your entry criteria so that if there’s an unexpected shift, you can pull out of the trade easily.

Forex Trading Strategies

Given that you need to make lots of profits in a short amount of time, Forex strategies might be risky. You can quite as easily employ any of these strategies or you can look at other sources for detailed strategies.

Cryptocurrency Trading Strategies

For a day trader who’s psyched up, the crypto market offers lots of opportunities that they can exploit. You will surely not need any experience in how Bitcoin and Ethereum work, or even hold any opinion about their future. All you need is a straightforward strategy to make huge profits.

Stock Trading Strategies

Day trading strategies for the stock market rely heavily on some of the principles outlined in the length of this page. You can use most of them. However, we have outlined a specific strategy that you can use specifically for the stock market.

Moving Average Crossover

● A 20-period average line — It is the fast-moving average

● A 60-period average line — It is the slow moving average

● A 100-period average — This is the trend indicator

A buy signal is usually generated by this strategy when the fast-moving strategy surpasses the slow moving average. On the other hand, a sell signal is generated when the fast-moving average goes under the slow moving average.

This means that you will create a position when the moving average line crosses over to one side. You will close the position up when the line crosses over to the other side.

For a trend to be defined, the price bar has to stick above the 100-period line.

Spread Betting Strategies

These strategies are usually straightforward. With spread betting, you have the ability to speculate on many markets worldwide.

CFD Strategies

Though developing day trading strategies might be hectic, instruments such as CFDs could actually lighten the load.

The main issue with CFDs is where the trade enters and exits. With CFDs, you stand to make a profit when an underlying asset moves relative to the already decided position, despite the fact that you don’t own the asset. This is why it is growing increasingly popular.

Regional Differences

Some of the strategies used in one part of the world may not work the same way in another place. For instance, two countries may not react the same way to the same news.

Some countries also have some regulations regarding day trading. So, make sure to get all the important information about all regulations that might affect your investments before giving out your money.

There may be also some tax loopholes in some countries like in the Philippines. Get to know the type of taxes that you are expected to pay and whether you will have to do it domestically or internationally.

Trading for a Living

The decision to leave your day job for full-time day trading might not be easy. You might be faced with some challenges but this journey is bound to be an exciting one. You will need to have clear-cut strategies that will enable you to make as much profits as possible. You will also need to have a firm grasp on your emotions.

Conclusion

At the end of the day, your strategy will determine the amount of money you make. Often times, it’s always a straightforward strategy that gives the best results, whether your interest is in the NSE or gold.

Keep in mind, also, that technical analysis is important for your strategy. Control the amount of money that you invest each time. In conclusion, it may take some time to develop a strategy that will always give you the desired results, so be patient.

PS. If you liked this, give me, at last, a dozen claps for good luck ;)