Day trading is an essential trading strategy when a trader looks at daily profits. Traders can increase their money by earning small profits from the market on a daily basis. A day trader needs an effective trading strategy that forms after in-depth studies and technical analysis of the market.
Here in this article, there are some of the best day trading strategies from beginners to advanced traders. You can use these strategies to earn higher profits from the market. Select a strategy according to your trading styles and requirements.
What Is Day Trading?
In simple trams, day trading can be said as entering and exiting from your positions within the same trading day. Traders take advantage of quick price movements to book their profits from the trade. This can also be said as short term trading because it is for a very short period of time.
Traders need to study in-depth to recognise the points from where to enter and exit in a particular trade. You should do this only if you can afford to take risk of the market. Choose the best broker along with these things:
- Traders need a fast trade execution speed
- Ability to read and understand technical indicators
- Automated trading can even book higher profits
- Understanding to put stop loss at the right place
- Ability to understand charts patterns
The Basics for Day Traders
Before we start with the top day trading strategies you should understand some basics of day trading. It is a complex form of trading and day trading requires a high understanding of technical and fundamental analysis.
These below mentioned are the basics things that can make your trades more effective:
Money Management
Before you start trading in the market, figure out how much you are willing to take the risk. It is also known as risk management. One of the most important things is to prepare yourself to take the high risk of losing money.
Starting with Small
When you are at the starting stage, it is recommended that you do not frequently enter into trades. Take your time studying the charts to find trading opportunities and then enter the market. Always start with a smaller amount and target small profits.
Time Management
You need to manage some time and dedicate the same on a consistent basis to your trades. Monitor the market condition and look for opportunities on charts and wait for price swings. Determine the entry and exit points to maximise your profits.
Proper Education
If you want to make a profit with day trading you need to keep your knowledge up to date. Try to focus on daily market news, economic policies, financial news of companies, and other similar things to grab the opportunities.
Consistency
Day traders should keep their emotions aside and focus on their style of trading to grab profits. Figure out trading strategies that work for you and keep the right timing of entering and exiting. This can put a huge impact on a day trade.
Demo Account
If you are a beginner or want to try some new skills and strategies then you should get a demo account. A demo account is very helpful in the beginning as it eliminates all the risk. Traders do not lose their money and they can be safe with it.
Components for Buying and Selling
There are some of the essential components that every day trading strategy requires. Day traders should focus on these components as they are vital when you are making a trade. You can make good money by considering these components that are as follows:
Volatility
Another name for volatility is price range. It indicates how much you can earn from a single change in the price of the stock market. Volatility needs to be studied per trade before you buy or sell stocks or other assets.
Liquidity
Liquidity depends on the market participants, higher participants means higher liquidity and vice versa. Among all the markets the forex market has the highest liquidity. Traders can swiftly enter and exit any trade.
Volume
Volume refers to how many times the stocks, currency pairs, or other instruments are traded in the market. High volume stocks or assets are safer as they jump high in prices and profits per trade can also be more for a trader.
Top Day Trading Strategies
Day traders should study a few of the best trading strategies to find the best one according to their trading style. Here are a few of the best day trading strategies for beginners as well as advanced traders, which you can consider in your trades. The strategies are:
Trend Trading
Another strategy from the top day trading strategies is trend trading. It requires figuring out the market trend, which can be bullish or bearish. Traders need to find the trend of the market and then study the chart patterns of a trading asset.
In this way, you can find out how that asset reacts to the market trend. Follow the trend of the market and place trades according to it only. Use price charts to find opportunities and use risk management techniques to minimise the trading risk.
Breakout Trading
A day trader needs to study charts to identify the breakouts in prices. Breakouts refer to a small and quick change in the price of a trading asset. They lead to an upward or downward movement in the price of the asset.
Traders should use support and resistance levels along with other technical indicators to find profit earning opportunities. Select among the leading trading platforms that offer the best indicators and benefits.
Momentum Trading
This is one of the popular day trading strategies among day traders. It tells that there is always a stock that moves 10% – 20% per day. Try to find out that stock with the help of news and other sources that convey the performance of the whole market along with top performers.
There can be some investment news, quarterly or yearly results, and various other things about stocks. It can be a great opportunity for all the investors in the market. You can earn jackpot profit from a single day and even with a single trade.
Scalping
One of the best day trading strategies for professional traders. Scalping is used and popular with forex trading but can be used with others such as the stock market also. Traders focus on the sudden price changes in a few minutes to book their profits.
Technical analysis to find the price action is used to book profits. Some large traders also use automated trading to increase their trade execution speed and get the highest profits from the market. Trading risks can be reduced with the help of stop loss.
Advantages of Day Trading
Day trading is risky but everything has some advantages also. Traders that fits the requirements of day trading can choose a day trading strategies and begin with hunting the large profits within a day. The advantages a trader can see if he starts day trading are:
- There is no overnight risk against the price of a trading asset
- Faster earnings can be compounded to the next day trading capital
- It feels more excitement and thrill if you are doing day trading
- Traders do not need to pay the overnight holding fees for instruments
- Can be treated as your daily profession or business
- Traders can earn a living with the help of day trading
- The more you trade higher experience you will gain
- Easy to target the most trending trading instruments and book profits
- A trader can easily understand the support and resistance levels
Tips: Day Traders Can Use
Day trading is a difficult task and many traders face loss in this trading. This can be because of a lack of knowledge of trading experience. Here are a few tips for day traders, they can use these tips to generate higher profits from their trades. The tips are:
- Do not quit trading with the starting losses, the losses are your experience
- Determine the correct entry point of a trading asset to grab the highest profit
- Day trading is done for a short period of time ranging from a few minutes to hours
- Trading volume is also an important key to get the maximum benefit from your trade
- Select a broker from the best online brokers for traders and compare them
- Use stop loss to prevent the situation of excessive loss and save your trading capital
- Determine your profit target on the basis of your studies before entering the trade
Leading Brokers for Day Traders
There is a huge variety of online brokers in the market but you need to find one that suits your requirements. A few of the leading brokers are listed below:
InvestLite
- Founded in – It was founded in 2020 by Bayline Trading Ltd
- Regulated by – the International Financial Services Commission (IFSC) of Belize
- Maximum leverage – 1:500 for professional traders
- Account types – demo, silver, gold and platinum trading accounts
- Trading instruments – more than 350 trading instruments from leading markets
- Commission and fees – a commission-free broker with swaps and spreads payable
- Trading platform – WebTrader and a Mobile App powered by MetaTrader 4
- Customer support – 24/5 dedicated customer support to all the traders
- Deposit and withdrawal – traders can choose from several options to manage funds
- Educational and analytical tools – a wide range of educational resources and research tools
- Open An Online Trading Account with Investlite
ETFinance
- Founded in – It was founded in 2018 by Magnum FX (Cyprus) Ltd
- Regulated by – the Cyprus Securities and Exchange Commission (CySEC)
- Maximum leverage – 1:500 for professional traders
- Account types – demo, silver, gold and platinum trading accounts
- Trading instruments – more than 250 trading instruments from leading markets
- Commission and fees – a commission-free broker with swaps and spreads payable
- Trading platform – WebTrader and a Mobile App powered by MetaTrader 4
- Customer support – 24/5 dedicated customer support to all the traders
- Deposit and withdrawal – traders can choose from several options to manage funds
- Educational and analytical tools – a wide range of educational resources and research tools
- Open An Online Trading Account with ETFinance
101investing
- Founded in – It was founded in 2020 by FXBFI Broker Financial Invest Ltd
- Regulated by – the Cyprus Securities and Exchange Commission (CySEC)
- Maximum leverage – 1:500 for professional traders
- Account types – demo, silver, gold and platinum trading accounts
- Trading instruments – more than 250 trading instruments from leading markets
- Commission and fees – a commission-free broker with swaps and spreads payable
- Trading platform – WebTrader and a Mobile App powered by MetaTrader 4
- Customer support – 24/5 dedicated customer support to all the traders
- Deposit and withdrawal – traders can choose from several options to manage funds
- Educational and analytical tools – a wide range of educational resources and research tools
- Open An Online Trading Account with 101investing
Start trading after comparing and selecting the best broker for you. The best part if you choose one of them is that you can trade CFDs with this provider. Try to keep the use of leverage to a minimum because traders start losing money rapidly due to leverage.
The Bottom Line
Day trading can be highly profitable for traders and it has the power to become your primary source of income. Select a trading strategy from the top day trading strategies to generate higher profits. There are many advantages and many types of trading fees that can also be eliminated with the help of day trading. Also, choose the best broker as well as the financial market for trading. They can also have a huge impact on your trades.
FAQs
Why are CFDs the Complex Instruments of the Market?
CFDs are complex instruments and come with a high risk of losing your money. They are contracts of differences in which you do not need to hold the asset. The net settlement can be used to check whether there is profit or loss. Expert traders who are having a higher trading experience use them to earn profits. New traders should not trade them as most retail investor accounts lose money when trading CFDs.
Which Are Popular Forex Trading Strategies?
If we talk about forex trading strategies, there are many strategies. But a few of them are very popular and can fetch good results. The best forex trading strategies include scalping, breakout trading, position trading strategy, and others. Traders who are indulged in forex trading should study them to generate higher profits.
Is Position Trading Strategy Good for Day Trading?
Position trading can be said as a good trading strategy but traders can’t use the same for day trading. In this strategy, traders need to hold their positions for a specific set of time. On the other hand, day trading is making quick profits within a single day. Therefore, it is quite different according to the requirements.
