Day Trading Strategies – For Beginners To Advanced

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Intraday trading strategies are essential when looking to capitalize on small and frequent price movements. A consistent and effective strategy is based on in-depth technical analysis, using charts, indicators and patterns to predict future price movements. This page will give you a complete breakdown of beginner trading strategies, working up to advanced, automated, and even asset-specific strategies.

It will also outline some regional differences to be aware of, as well as point out some helpful resources. Ultimately, however, you will need to find a daily trading strategy that suits your specific trading style and requirements.

The basics
Incorporate the invaluable elements below into your strategy.

  • Money management – Before you start, sit down and decide how much you are willing to risk. Keep in mind that most successful traders will not put more than 2% of their capital on the line per trade. You have to prepare for some losses if you want to be there when the gains start rolling in.
  • Time Management – Don’t expect to make a fortune if you only spend an hour or two a day trading. You need to constantly monitor the markets and keep an eye out for business opportunities.
  • Start small – As you adjust, limit yourself to a maximum of three actions in a single day. Better to be really good at a few than to be average and not make money offloads.
  • Education – Understanding the complexities of the market is not enough, you also need to stay informed. Make sure you are up to date with market news and any events that affect your asset, such as a change in economic policy. You can find a wealth of financial and business resources online to keep you informed.
  • Consistency – It’s harder than it sounds to keep emotions at bay when you’ve had five coffees and been staring at the screen for hours. You should let math, logic, and your strategy guide you, not nerves, fear, or greed.
  • Timing – The market will become volatile when it opens each day and while experienced daily traders can read patterns and earnings, you must bide your time. So wait for the first 15 minutes, you still have hours to go.
  • Demo Account – A must-have for any beginner, but also the best place to backtest or experiment with new or refined strategies for advanced traders. Many demo accounts are unlimited, so they have no time restrictions.

Components Every Strategy Needs

Whether you are looking for automatic daily trading strategies or tactics for beginners and advanced, you will need to consider three essential components; volatility, liquidity and volume. If you are going to make money from small price movements, choosing the right stocks is vital. These three elements will help you make that decision.

  • Liquidity – This allows you to quickly enter and exit trades at an attractive and stable price. Liquid commodity strategies, for example, will focus on gold, crude oil, and natural gas.
  • Volatility – This tells you your potential profit range. The higher the volatility, the more profit or loss you can make. The cryptocurrency market is a well-known example of its high volatility.
  • Volume – This metric will tell you how many times the stock/asset has been traded in a given period of time. For intraday traders, this is better known as “average daily trading volume”. High volume indicates that there is a significant interest in the asset or security. An increase in volume is often an indicator that an up or down price jump is fast approaching.

Day Trading StrategiesBreakout

  1. Breakout

Breakout strategies focus on when the price clears a specific level on your chart, with a higher volume. The breakout trader enters a long position after the asset or security breaks through resistance. Alternatively, enter a short position once the stock breaks below support.

After an asset or security trades beyond the specified price barrier, volatility generally increases and prices will often trend in the direction of the breakout.

You need to find the right instrument to trade. When doing this, keep in mind the asset’s support and resistance levels. The more frequently the price reaches these points, the more validated and important they become.

Entry points
This part is nice and simple. Prices set to close and above resistance levels require a bearish position. Prices set to close and below a support level require a bullish position.

Plan your exits
Use the asset’s recent performance to establish a reasonable target price. Using chart patterns will make this process even more accurate. You can calculate recent average price changes to create a goal. If the average price change has been 3 points during the last price changes, this would be a sensible goal. Once you have reached that goal, you can exit the trade and enjoy the profits.

2. Scalping

One of the most popular strategies is scalping. It is particularly popular in the forex market and seeks to capitalize on minute price changes. The driving force is quantity. You will look to sell as soon as the trade is profitable. This is a fast-paced and exciting way of trading, but it can be risky. You need a high probability of trading to match the low risk vs. reward ratio.

Be on the lookout for volatile instruments, attractive liquidity, and be punctual. You cannot wait for the market, you must close the losing trades as soon as possible.

3. Use pivot points
An intraday trading pivot point strategy can be great for identifying and acting on critical support and/or resistance levels. It is particularly useful in the forex market. Additionally, range-bound traders can use it to identify entry points, while trend and breakout traders can use pivot points to locate key levels that need to be broken for a move to count as a breakout.

Calculation of pivot points
A pivot point is defined as a point of rotation. It uses the prices of the highs and lows of the previous day, plus the closing price of a security to calculate the pivot point.

Note that if you calculate a pivot point using price information from a relatively short period of time, the accuracy is often reduced.

So how do you calculate a pivot point?

  • Central Pivot Point (P) = (High + Low + Close) / 3

You can then calculate support and resistance levels using the pivot point. To do that you will need to use the following formulas:

  • First Resistance (R1) = (2*P) – Low
  • First Support (S1) = (2*P) – High

The second level of support and resistance is then calculated as follows:

  • Second Resistance (R2) = P + (R1-S1)
  • Second Support (S2) = P – (R1- S1)

About the author

Nafees Saifi // entrepreneur, author, trainer, and stocks and FX trader. 
Nafees Saifi is a professional FX trader from, India. Nafees has extensive experience trading commodities, bonds, and equity futures in the Asian, European, and US markets. Nafees holds a Bachelor of Finance and Economics degree and is focused heavily on Investment Finance and Quantitative Analysis.


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