Day traders try to earn money by taking advantage of small price fluctuations.
They target breakout, enter a trade, and exit it at resistance.
They also target minor price swing and trade with high lots.
Common asset classes are currencies (Forex), stock indices (Dax, Dow, etc), individual stocks, commodities, bonds.
The financial instruments used for trading are CFDs, FX (spot), options, futures, certificates.
The decision about the traded asset is influenced by the following criteria:
Liquidity enables you to buy and sell a stock, currency pair, etc. at a fair price.
If you buy a stock and there is no more demand, you have a problem.
Liquidity is therefore characterized by high supply and demand.
The most liquid market in the world is the Forex market.
Over $ 5 trillion is traded here every day.
Volatility measures the price range of an asset in the period under review.
For example, if a stock normally fluctuates around $ 2 per day and suddenly has a price range (daily low to daily high) of 10$, then it is extraordinarily volatile.
Often, this is based on a fundamental reason such as report and the traded volume increased.
Many day traders love this volatility and develop day trading strategies around this scenario.
If you know which market you want to trade-in and whether you prefer volatility or silent market, you can select an asset such as one or more currency pairs, stocks from different industries and countries.
The following tools will help you to keep track of this multitude of possibilities
News moves the markets. So it is helpful if you have a news feed that provides you with market-relevant news promptly.
This is how you get trade ideas and can implement them before the uptrend is aborted.
Intraday Candlestick Charts
You need chart software where you can see real-time prices, use chart technology (e.g. trend lines), and select many assets.
Most online brokers already equip you with this tool. Forex traders mainly use the Metatrader, which enables all of this.
Day Trading Strategies for Beginners
As soon as you have made your first steps on a demo account and notice which trading style suits you and which approaches suit you, the point is to optimize the setup that has been tried and tested so far and then to set up a strategy portfolio from several setups.
Below, you will find basic day trading strategies that you can use and provide with your parameters.
Trend following strategy
A trend follower positions himself according to the current trend. Several time units (D1, H4, H1)should be observed.
The overriding trend is determined in higher time units.
Then, depending on your trading style, you take a lower time unit (e.g. hourly chart) and wait until the trend points in the same direction here too.
Finally, you position yourself at the support line and hope that the trend will continue.
Trading on Price Correction
A trend always consists of a movement in the direction of the trend and a subsequent correction.
After all, no price rises inexorably and every movement comes to an end.
Nevertheless, the trend can still be intact. Anyone who still believes in the existing trend but wants a lower entry-level is waiting for a correction.
With the help of Fibonacci retracements, pivot points, etc. you can then bet on a rebound.
Fundamental drivers such as market-relevant news from geo and monetary policy play a role in new trading, says Techpally.
Corresponding news creates momentum in the price and the trader positions himself in the direction of the breakout.
This is the best trading strategy for us and any other trader.
This is how you can make a big win, especially if you don’t exit quickly but you’ll have to keep following the trend.
You should also not be greedy by trying to liquidate your position at the peak, you may lose a significant part of your paper profit.