0
0
Are you new to day trading and wondering what the best day trading strategies are for getting started? With all of the different platforms, tools and resources available, it can be overwhelming trying to figure out where you should begin. The good news is that there are a variety of strategies that can help traders successfully navigate their markets – no matter how experienced or inexperienced they may be. In this blog post, we discuss some of the best day trading strategies for beginners so you can start making better trades from day one!
What is Day Trading?
Day trading is a style of trading that has the potential to be incredibly rewarding, but also carries risks. It involves buying and selling a financial instrument within one day, or even several times in that same period - not just during market hours but also in some cases after they close.
With its fast-paced nature and ability to take advantage of small shifts in price over time, day trading demands an experienced hand ‒ otherwise it can easily become gambling instead! However done correctly with adherence to a strategy and research, this style of trading can really pay off for savvy, and knowledgable traders.
To achieve long-term success in day trading, traders need to be diligent and disciplined. All the hard work pays off when they use tools such as candlesticks, trendlines or chart patterns – along with monitoring liquidity, volatility and volume – to identify opportunities to trade. The first step is to identify what are the best day trading strategies.
Elements of Best Day Trading Strategies for Beginners
For every beginner trader, there are certain strategies to get you up and running. Don't be fooled into believing that complex tactics will yield the best results in your trading endeavours. Often times it's all about keeping things simple! With our suggestions on hand, we aim to provide clarity so you can find success with an effective yet straightforward strategy, whichever of the four best day trading strategies you choose.
Fundamentals of Best Day Trading Strategies
Smart trading requires taking into account three key considerations: understanding volatility, gauging liquidity, and monitoring volume. If you want your investments to bring rewards, it is essential to become familiar with how these distinct elements can help guide the best decisions.
Volume
Volume is an important metric that can help show if there’s a lot of interest in a certain asset. For day traders, knowing the average daily trading volume of an asset can be a powerful tool to have in your arsenal. This figure provides insight into how many people are actively trading at one time. An increase in this number typically precedes changes in price! Knowing when and where interest levels peak can provide you with major market advantages.
Liquidity
With liquidity, you can smoothly enter and exit trades at an appealing and reliable price. Liquidity can give you a competitive edge when trading sincere you can jump into investments with peace of mind knowing that you'll get an attractive and consistent price when it's time to exit.
Volatility
Knowing the volatility of an asset is critical for any day trader. It will help you estimate your potential profits, as well as prepare you for possible losses from large swings in market prices. Monitoring volatility closely can maximize your trading success, while at the same time managing your risk.
Now let’s have a look at the 4 best day trading strategies for beginners…
4 Best Day Trading Strategies for Beginners
Ready to dive into the best day trading strategies and take your day trading skills up a notch? Let’s have a look at these 4 day trading strategies for beginners:
Day Trading Strategy #1: Momentum Strategy
Momentum Strategy is an attractive playground for beginner traders! By following the news and observing high volume movements of stocks, there is potential for dynamic profits to be made. The concept behind it? Ride a trend until you spot signs of reversal - then take advantage to maximize your returns.
An alternative approach involves fading price drops based on when trading volume begins to dwindle. There’s frequently price corrections of about 20-30% ‒ giving you plenty of opportunities to take advantage of a bounce.
Just remember: stay informed about upcoming news and announcements that may impact those all important trends.
Day Trading Strategy #2: Breakout Strategy
Breakout trading is a great way to jump on the price action when it starts to break free from its usual range! As an active trader, you'll be ready and waiting for prices to clear past resistance levels so that you can go long. And if the asset drops below support? That's your cue as well - take the opportunity with a quick short position. The key here is finding what instrument works best for you; pay special attention to where their natural boundaries are at (Support & Resistance) since these points become more validated over time due being touched multiple times in the recent past.
Breakout day trading entry:
With breakout day trading, finding the right entry point is key. When prices close above resistance levels, you should take a bullish approach to maximize your success. However, if they happen to be closing below support then selling of going short may be more beneficial.
Breakout day trading exit:
The key to success in breakout day trading is setting an exit plan ahead of time. With the help of chart patterns and average recent price swings, you'll have a more accurate outlook for where your asset will end up ‒ then it's just about reaching that goal! Once there, pulling out with profits lets you enjoy the fruits of your labour.
Day Trading Strategy #3: Pivot Point Strategy
Day trading pivot point strategies are particularly beneficial for forex markets as they help locate critical support/resistance levels. From range-bound traders to trend and breakout players ‒ whatever style you follow; using these points of entry is sure to give your trades an edge.
Day trading Strategy #4: Reverse Day Trading Strategy
While its controversial nature might keep some traders away, reverse trading is a popular tactic around the world. Also known as reverse trend trading or mean reversion strategy, this method requires you to go against conventional wisdom in order to identify potential pullbacks and predict their strength ‒ something that can only be done with extensive knowledge of the markets!
But there's one type of reverse trading which has been gaining traction lately: The ‘Daily Pivot’ strategy focuses on buying/selling daily low-and-high reversals for maximum gains. Whether it works for you or not depends largely on your experience level - but give it a try if you're feeling adventurous!
11 Tips for Day Trading Strategies for Beginners
Here are eleven essential tips for making the most of your day-trading strategies. Master these basics and you'll be on track towards potential success in no time.
Tip #1: Manage Your Time
Time is money, my friend! Making the most of these best day trading strategies starts with proper time management. Allocating an adequate amount of focused attention to tracking markets and spotting potential opportunities is essential for success. If you have limited availability, this probably isn't the best approach for you as markets need to be watched closely in order for opportunities to be seized quickly. If you choose to go down this path maximize every moment by ensuring that any allotted time used for trading serves as a productive investment; every minute, even second, counts!
Tip #2: Manage Your Money
Before you begin on these day trading strategies for beginners, sit down and decide how much capital you're willing to risk on each trade.
Experienced day traders typically only risk 1-2% of their total account per trade. For example, if you have $10,000 in your trading account, that would mean risking $100 -$200 at any given time. This way the risks are more controlled and manageable and you will set aside some surplus funds so you can trade another day.
Tip #3: Start Small
If you're just getting started with trading, concentrate on three assets or markets max in a single day. You'll make much more money becoming an expert at few things than staying average across multiple investments!
Don't let the cost of stocks hold you back either; thanks to fractional shares, even pricey stock can be within reach. For example, if Apple is currently trading around $2,500 per share - some brokers allow you to trade a fraction of a share.
Tip #4: Keep Learning and Stay Updated
If you want to power up your day trading game, staying updated on the markets and learning how to differentiate between valuable signals or just noise is essential. Doing your homework requires making a Wishlist of trades that interest you plus keeping yourself informed about their updates as well as general market news. Make sure to bookmark reliable online sources for important business announcements so that nothing slips past!
Tip #5: Be Consistent and Manage Emotions
Consistency is key when applying day trading strategies for beginners. It's essential to maintain composure under pressure and rely on your strategy rather than following impulses. Even in the most tumultuous market environments, day traders must learn to manage their emotions while keeping a cool head and making decisions based on logic.
Tip #6: Choose Your Timing
With the market functioning as a volatile engine when it starts up each day, there is potential to profit for those who know what they are doing. For everyone else, especially beginners or traders new to the scene, biding your time and holding back during the first 15 minutes of trading can be beneficial in avoiding any sudden drops or spikes that may occur at open. Making smart moves between 10am-3:30pm usually yields more favourable results due to less volatility than nearer opening/closing hours; though experienced traders might spot some great opportunities here too.
Tip #7: Practice and Back Test
Starting to trade doesn't have to be intimidating. With demo accounts, you can explore your trading strategies with confidence ‒ whether you're a beginner or an expert. Not only are they free and unlimited, but it's also the perfect way for any trader of all levels to back test these best day trading strategies without risking real money.
Tip #8: Stay Away From Penny Stocks
If you're trading the stock market, it's tempting to chase the lowest priced options out there. However, penny stocks are almost always a bad choice - they tend to be incredibly illiquid and don't offer much hope for long-term success. Most of these trade on OTC (over the counter) exchanges outside major stock markets so make sure that your research is thorough before investing in them.
Tip #9: Cut Your Losses
Cutting your losses is a key part of smart day trading. Knowing how to enter and exit orders can help protect you against unwanted surprises in the markets. You could use market orders, which execute at any available price point without guarantee or limit orders that let you set an exact fill price ‒ but come with no guarantees as well. Alternatively, more experienced traders might opt for options strategies such as hedging their positions for extra protection.
Tip #10: Commit To a Plan
Achieving success as a trader is all about having the right plan and sticking to it. It's important not to get swayed by your emotions or be tempted into chasing profits. Instead, stay committed to your pre-determined best day trading strategies. Remember: planning out each trade beforehand will help you maximize returns while keeping risk in check.
Tip #11: Have Realistic Expectations
To achieve success in trading, it's important to set realistic expectations for your profits. Don't put all your eggs in one basket. If you can cultivate a strategy that yields more wins than losses, even if they're only modest gains, then those profits will add up over time. Make sure each trade comes with an acceptable financial risk that won't break the bank ‒ so have entry and exit methods clearly mapped out before taking action!
Which is the Easiest of the Day Trading Strategies for Beginners?
For those looking to jump into the thrilling world of trading, one strategy stands out as easier for beginners than others: following trends. Instead of trying to buck the market by 'contrarian trading', going against what everyone else is doing, a beginner can simply identify and move with positive shifts in asset prices; after all, the trend really IS your friend! That said, strategies like scalping or short-term trades based on newsworthy events may not be advisable just yet if you're new: ‘sometimes it's better to ease into something rather than diving head first!’.
Ready to Try One of These Day Trading Strategies?
Congratulations! You’ve made it to the end of your best day trading strategies journey and should now be armed with all the essentials necessary to move forwards. Now, take that knowledge and get out there!
Test the strategies we’ve provided you with on a demo account and see which one works best for you. Once you’re confident enough and have developed your risk management skills, move onto a live account and start small.
Now it's time for you to put your money where your computer mouse is and become the master of your own financial destiny. Remember to trust your judgment and never give in to panic. The goal is to navigate risks wisely, build wealth slowly and intelligently, and take cues from experienced professionals in the market. So, if you’re ever stuck or need something to get started, download our Prime Index free signals and get insights from experienced market analysts.
Remember that day trading is not about luck but skill – stay focused and don’t let fear interfere with proper risk management techniques.
