Day Trading Strategies That Work For Successful Traders
Day trading is popular for those who have the time to closely monitor the markets during the day. While it may sound easy to some, it isn’t. Unless you already have a good strategy in mind, day trading can be complicated for a beginner. You need to monitor small price fluctuations throughout the day and make decisions based on them.
To all aspiring day traders, we are going to discuss different strategies that work in different markets in this article.
Best Day Trading Strategies That Work For Most Markets
Just like in any other kind of trading, you need to have a good strategy in day trading to make the most out of it and avoid big losses.
When we talk about day trading, high volumes are traded in a limited amount of time. The first thing that you need to determine is what market you should pursue.
If you want to invest in a company’s shares, you can trade with stocks. If you want to trade currencies, you go with the Forex market. If you feel like trading with commodities or standardized contracts such as crude oil or gold, you might want to check out the futures market.
It doesn’t matter what market you want to trade in. The important thing is that you know how to establish your position in it and make profits while staying true to your strategy.
There are all sorts of strategies you can adapt in day trading. Because you’re assuming to buy and sell in the same day, quick decisions are required. Everyone can develop their own strategy but they have to start somewhere. Below are some of the best day trading strategies that work and you can learn how to use:
- Intraday trend following. This strategy is easy to use by day traders because its focus is on short trends in the market. With trendlines, a trader can see a turning point in the market which is used to place a trade.Tail Gap strategy. This strategy can be used in a stock market or a futures market. It is one of the most profitable and reliable trading strategies which requires traders to take signals in the direction of a main trend in the market.
Mean Reversion. One of the most popular trading strategies, mean reversion is looking at the medium term trends under the assumption that there is a price trend in a fluctuating asset.
Momentum trading. A popular long-term trade strategy, momentum trading can also be used in short-term trades. For day trading, this strategy works well in stocks especially when they are increasing in volume and volatility.
Entry and Exit Strategies
As a general rule in day trading, you need to have a good entry and exit strategy before starting. This way, setting these up would be helpful in minimizing losses in worst case scenarios.
A stop-loss will prevent the trader from incurring any more damages and protect your capital.
Knowing when to go in for the trade is essential in day trading. Following the trendlines can be used in determined when to enter a trade.
Simple Tips For Day Trading Forex With Examples
- Focus only on a single currency pair as you start and expand later on.Market timing is a good strategy for day trading since you have the time to monitor price fluctuations throughout the day.
Don’t rely too much on forex trading indicators.
Don’t trade against the trend.
Simple Tips For Day Trading Stocks With Examples
- Don’t trade just for the stock, trade also because of the company.Best time for trading is the first one to two hours after the open due to its volatility.
Learn the basics of the stock market.
Control your emotions and avoid trading overactivity.
Simple Tips For Day Trading Options and Futures With Examples
- Be able to think independently.Have access to a trading software which provides real-time quotes.
Start slowly and don’t overtrade.
Study the assets and monitor their price movements.
Best Day Trading Strategies for Beginners
Good news for beginner day traders, you don’t have to worry too much about having a complex strategy.
Most day trading strategies involve looking at many indicators that can actually be quite confusing. However, when it comes to day trading, simplicity is best. There are only two things you need to look at: trendlines and price bars.
Before we get into that, let’s have an overview of how day trading works.
How To Start Day Trading
If you have a computer, a fast Internet connection, and a trusted trading platform, you already have the basics to start day trading.
The next thing you need to do is to have a broker. In getting a good broker for day trading, you need to consider the following:
- Low commissions
- Competitive spreads
After you have sorted them out, you need to determine the market you’re going to trade in and make a strategy that will help you make a profit.
What Does The Average Day Trader Make and Can You Make a Living?
You can make a living out of day trading but you need to become an expert which takes experience. Day trading is not the same as long-term trading. You need to be quick and there is less room for error. Which is why day traders should have a clear plan ahead of trading.
Part-time day traders can generally make $500 a day. These traders spend two to three hours only, unlike those who spend the whole day. However, it doesn’t mean that earnings from day trading would be higher if you stay longer. Sometimes, what you earn for a few hours can also be what you earn after a whole day.
How Much Money Do I Need To Start?
Different markets require different capital to start. For example, the forex market requires the least capital to trade in. The recommended minimum trading capital for it is $500. In futures trading, a minimum of $2,500 is required, although, trading in the popular S&P 500 E-mini futures contract only requires $1,000. Trading stocks have the highest recommended minimum required capital at $25,000.
No market is better than the other so you need to read more about each of them. Determining a good market is the first step you need to do well in day trading. That way, you can research it and understand better how the market moves. When you have already picked the market, make sure that you have the minimum required capital.
How Can You Be Successful?
To be successful at day trading, you need to have the patience to monitor the small price fluctuations in the markets. You also need to have a trading plan that you need to follow religiously. Discipline is really important when it comes to day trading, so a strong mentality is needed. Practicing regularly will also eventually make you successful. Follow the best dat trading strategies that work mentioned earlier in this article.
Before day traders could actually trade, they need to be more knowledgeable on how the system works. Because of its fast-paced environment, day trading should be understood before risking a lot. Below are some resources such as day trading software, strategies, and tips that are worth reading.
Day Trading Software
Beginners and expert traders don’t need any complicated trading platforms that show too many indicators which are completely unnecessary. DynoTrading offers the DynoBars as your trusted tool in day trading. Its features include the following:
- Uses Bar Volume Analysis to determine turning points in the market.Filters out noise.
Removes price distortions.
Runs proprietary algorithmic code using live chart data then organizes to a clean data.
When it comes to day trading, you need to be fast in making decisions because trades are only open for a limited amount of time. While indicators are generally helpful when making a trade, too many of them can overcomplicate things. But with DynoBars, it has a Trend Filtering approach which reveals the Master Trend in the market and allows the trader to make a decision clearly based on the trend.
To know more about this software and other trading servics, click here.
Day Trading Strategies PDF
For those who want to have a more comprehensive and detailed day trading strategies that work, you may download this PDF for personal use.
Top 10 Trading Rules
Day trading should not be complicated, even for beginners. Here are 10 rules in day trading that should guide you when you pursue it:
- Prepare the basic requirements such as a computer, Internet, a good broker, and a trusted trading platform.
- Have a good strategy beforehand. Before you plunge into day trading, you need to plan a strategy and know how to execute it properly.
- Understand the market. Whether it is forex, futures, or stock market, you need to understand the movement of the market you’re in.
- Stick to your trading strategy once you enter a trade. This is where you’re self- discipline will kick in. Be confident about the strategy you’ve made and stick to it.
- Set a stop-loss or price target. If things don’t go as you expected or you have already reached your limit, a stop-loss is very important. It will prevent you from making any trades and incurring additional losses.
- Be patient, but be vigilant. Rushing will only lead to problems but you need to be fast in making wise decisions.
- Be mindful of your money. Don’t put all of it into one trade and start small especially if you’re a beginner.
- Discipline yourself. Don’t be tempted to trade more if you’ve already made a profit. Know your limits.
- Practice until you get the hang of it. Day trading doesn’t assure you of profits immediately and practice is the best way to gain the required experience.
- Don’t be afraid. There are times that traders would overthink once they enter a trade and that is a big no-no. Whatever the result will be, you need to learn from it.
Thanks for reading this article about day trading strategies that work.