Day Trading Strategies – The #1 question most day traders have is, what strategy should I follow?
Do you have the same question?
If yes, do not worry. Today, we will share with you five-day trading strategies that you can follow. If you keep reading, it will become easier for you to pick the right one.
1. Trend Trading:
Trend trading refers to trading on breakouts or breakdowns. Breakouts occur when the price of an asset class moves fast. Once that is confirmed, you need to buy the asset class and trade the momentum.
Similarly, breakdowns occur when the asset class prices break a support level. After that, it falls up to the next support level. In this, you have to short the asset class once it breaks the support level.
You might be thinking, how can you determine a breakout or break down?
You would need immense knowledge of technical analysis and candlestick patterns to get in mind the same. You can also use our predictive analysis, automated analysis, or proven layouts to determine the same as well. It means whether you want to opt for social trading or trend trading, but the platform can help you in both cases.
The advantage of trend trading is that you can initiate and close your trades quickly since momentum would be on your site. That is why; it is a good trading strategy to follow.
2. Contrarian Trading:
Contrarian is very difficult to execute successfully. It involves trading against the trend in the expectation that it would die down or reverse. As a result, your analysis needs to be pretty accurate, or the trade would hit the stop loss pretty soon.
On the positive side, however, if you’re right, you would be able to capitalize on the entire reversal, which will help you make a significant amount of profit.
If you want to use this trading strategy, there are a few tips that you need to follow. These include:
- It would help if you had a firm understanding of the fundamentals of the asset class.
- You need to have vast experience in trading the charts as well.
- While executing such a trade, you need to follow risk management principles.
- You need to monitor your position throughout its tenure.
Only when you follow these few tips, it will become easy to use this day trading strategy to your advantage. In a nutshell, this is a trading strategy only for the experienced traders and not new ones.
Scalping is a trading strategy that relies on anomalies in the bid and asks the price of an asset class. Due to this very reason, the speed at which you need to initiate this trade and close this trade is pretty brisk. It also requires you to monitor the charts for a time.
The anomaly can arise due to a wide variety of reasons like:
- Sudden news
- Market opening and closing
- Low volumes
- Glitches and discrepancies
Scalpers often execute multiple trades in a relatively short time. The profit on every trade can be 0.5%. However, since it would be executing various trades to take advantage of the price discrepancy, the overall profits will be on the higher side.
Scalping as a strategy is easy to implement since you need to monitor the bid and ask price to execute the trade. That is why; it is a pretty good option for beginners as well.
4. News Trading:
With proper money management, News trading is one of the easiest ways to make money when it comes to day trading. It involves initiating a trade based on news.
You might be thinking, how can you initiate the trade before the market reacts to the news?
There are ways in which you can do so. These include:
- You have to subscribe to various news terminals like Bloomberg terminal to gain a few advantages when it comes to news trading.
- You have to keep a watch on the social media chatter as well.
- You should monitor the official asset class resources if you want those extra seconds to initiate a trade before the rest of the trading community knows it.
Once you follow these steps, it will be easy to gain access to that news for a few seconds. It is more than enough to initiate the trade and capitalize on the reaction of the asset class price to that news.
The best thing about news trading is that almost always, you can predict the direction of the momentum. Once you go through the news, it is easy to decipher whether it is positive news or negative. Accordingly, you can initiate a short or long trade. The news based trading does not require any special fundamental skills. Due to this reason, it is often practiced by a large number of day traders.
Such trades will close out with a couple of hours. It means that you can minimize your working hours. It is one of the primary reasons why it is the best option for beginners.
5. Social Trading:
What if you have access to a successful strategy right away?
What if, you can bank on someone’s years of experience to execute your trades correctly?
That is precisely the concept of social trading. Our social trading platform, for example, has thousands of traders who trade publicly.
You can go through the previous track record and decide for yourself whether you want to mimic their trading strategy or not. Not only are their trading records public but also the returns which they have made.
It means that you can make an informed decision by going through the trader profiles on our social platforms. That is why; social trading is becoming more and more popular as a trading strategy.
It is one of the most accessible trading strategies that you can follow when starting with day trading.
So, if you’re looking for suitable day trading strategies you can follow, these five might be the best bet for you, since they have been extensively tested.
Ultimately, however, whether you make a profit or loss would be dependent on how you execute the strategy.
Instead of going with any substandard strategy or untested strategy, it is better to follow our guide above and pick one.