Before stepping into the world of highly technical indicators, getting familiar with the basics of simple day trading strategies is crucial. So many traders think they require a sophisticated approach to succeed intraday; however, simple techniques usually work efficiently.
Essential Forex Trading Strategies for Beginners
Below mentioned are the key elements that you must add to your strategy.
Capital management: Before beginning to trade, take the time to decide the amount of money you can risk. Note that most famous traders only risk 2% of their capital on the line for each trade. Be ready to bear some risks to gain profits from winning.
Time management: To get wins rolling, you must give enough time to trading. You’re mistaken if you expect to get lucky while spending only one to two hours trading daily. You must watch out for the market processes and get hands-on with the best trade opportunities.
Begin small: Do not prefer quantity over quality while trading. Your three stocks in a single day are enough to start with. You don’t need to go for more shares and end up making no money.
Stay informed: With a clear understanding of the market, updates are also necessary. Note that knowledge of the market directly affects your assets, for example, changes in economic policies. Hence, stay updated regarding the events and recent happening in the market. You may find plenty of guides and tutorials online to keep you informed.
Be Consistent: Keep your emotions out of the trading game! Do not let your feelings of greed, fear, guts, etc., guide your strategy; instead, let logic and mathematics guide you.
Right timing: The market’s volatility keeps increasing daily, and seasoned traders know how to recognize the patterns and gain profits. Therefore, you must wait for the right time. You have so much time ahead, so wait for the first fifteen minutes.
Demo accounts: Beginners should never miss out on the demo accounts offered by platforms. The traders use these accounts to check, discover, and implement new strategies for experienced traders. Surprisingly, most of the demo accounts do not have any time restrictions.
Essential Components of Every Trading Strategy
If you prefer beginner, advanced, or automated day trading strategies, you must consider three critical components: volatility, liquidity, and volume. So if you want to profit from small price movements, you must choose the right stock. The following elements will help you to decide:
Liquidity: The function of liquidity is to make rapid entry and exits trades at an appealing and stable rate. To explain, the strategy for a liquid commodity will focus on natural gas, gold, and crude oil.
Volatility: Volatility will give you the maximum profit range. Remember that the higher the volatility is, the more profit and losses you will make—an example of significant fluctuations in the cryptocurrency market.
Volume: Volume determines the number of times you’re a stock or asset has been traded within the given amount of time. Day traders consider this volume as the average daily trading volume.’ Remember that the higher the size, the more demand and interest in the asset/stock increase. Therefore, when you see a rise in volume, know that the price is about to go up or down nearly.
Top 5 Forex Day Trading Strategies
1) Breakout Strategy: This strategy revolves around when from the price itself, one can get the specified level on the chart along with increased volume. Most breakout traders take long positions once the assets or stocks break beyond the resistance level. The traders enter a short place once the assets break below support.
The volatility rises once the assets or securities go beyond a specific price barrier; hence, the price follows the breakout direction.
Discovering the right instrument to trade is essential. While selecting, note the levels of asset support and resistance. If the price hits these points often, they become more critical and valid.
Entry Points
Entry points are precise and straightforward. A bearish position in the market is a requirement to specify the prices for close and above resistance levels. However, the prices set to close and below a support level need favorable positions.
Decide your exits
Keeping in mind the performance of the assets, set a reasonable price target. You can even make use of price charts to build an exact target. Also, you can use the latest average price changes to create the target. So the observed price swings have been three points for the last several price swings, then give it a go. Once you reach this target, exit the trade and enjoy your profit.
2) Scalping Strategy: Scalping strategy focuses on capitalizing the minute price changes. It is a mainly used trading strategy, particularly in the forex market. The quantity drives the system.
The traders sell when their trades become profitable. However scalping is an exciting and quick way to trade but risky. Hence, it would be best to have a high trading probability for balancing the low risks and high rewards.
Keep looking out for the volatile instrument, enhancing liquidity and the right timing. Do not wait for the market to close. Instead, close your trades as quickly as possible.
Momentum Strategy: The momentum strategy focuses on recent happenings, trending movements, and high volume for trading.
Usually, one stock moves for 20-30% daily, giving the traders adequate opportunity. All you should do is hold your position and exit when you see the signs of a reversal of prices.
Resultantly, you can stay away from price falls. So your targeted price reaches when the volume starts diminishing.
A momentum strategy is used rightly and is the simplest and most effective. Although staying up to date regarding news and earning announcements is compulsory. Some seconds on a single trade can significantly affect your profits at the end of the day.
Reversal Strategy: Reverse trading is a popular strategy globally known as pullback trending, trend trading, and a mean reversion strategy. However, so many people debate the adverse effects of the plan when implemented by beginners.
In this strategy, the traders trade against the trend. So here, you must predict all the possible pullbacks and their strength. You can do this efficiently by having vast market knowledge and trading experience.
A unique case of reverse trading is the ‘daily pivot’ strategy. The traders buy and sell each day’s low and high pullbacks/reverse.
Pivot Point Strategy: Day trading pivot point strategies are the best to detect and work on crucial support and resistance levels. The use of pivot points is beneficial in the forex market. Moreover, range-bound traders can use pivot points to track entry points.
In addition, trend and breakout traders can use it to locate the critical levels required for moves to count as breakouts.
Calculating the Pivot Points:
The point of rotation is known as the pivot point. For calculating the pivot points, you need to consider the highs and lows of the last day, along with the security’s closing price.
Remember that calculating pivot points using price information from a short time frame will reduce the accuracy of the trade.
Want to know how to calculate a pivot point? See below:
- (High + Low + Close) / 3 = Central Pivot Point (P)
After this, you can calculate the support and resistance levels using the pivot points. For this, you will have to apply the following formulas:
- First Resistance level (R1) = (2*P) – Low
- First Support level (S1) = (2*P) – High
Then, you can collect the second level of support and resistance by applying the following formulas:
- Second Resistance level (R2) = P + (R1-S1)
- Second Support level (S2) = P – (R1- S1)
Application of Pivot points:
In the FX market, for instance, you will observe the trading range of a session usually occurs between the resistance, first support levels, and the pivot point. The main reason is that so many traders play this range.
This method and system can also be applied to indexes; for instance, it will help form an effective S&P day trading strategy.
Limit the Losses:
Limiting your losses is an essential aspect while using margin. The reason is the need for this is common for the traders. Trading on margin increases the chances of exposure to risks like high price movements. However, this gives way to greater profits but also promotes significant losses. Surprisingly, you can avail of the stop losses.
The stop losses minimize your risks. For short positions, you can place stop losses above a recent high, while for long positions, you can set them below a recent low. Also, you can change it based on volatility.
To explain, if a stock price moves by £0.05 in a single minute, you may place the stop loss £0.15 away from the entry order, allowing it to vary.
Setting up two stop-losses is the most preferred strategy. The first step is to place a physical stop-loss order at a specific price level. It will be the most capital you can afford to lose.
Another strategy that traders implement is creating a mental stop-loss. They place the loss at a position where the entry point is breached. So in case of unpredicted turns, you can make a quick exit.
Foreign Exchange Trade Strategies
Forex trading strategies are risky as you must gather your profits in a specified time. You can pick any of the methods above for trading Forex or check our Forex page for detailed tips and strategies examples.
Cryptocurrency Strategies
There are numerous opportunities for day traders in the highly volatile cryptocurrency market. You might wonder if you will have to learn the intricate working of Bitcoin or Ethereum or will require a long-term view of the market’s feasibility. Just using easy strategies to profit from the exciting and unpredictable market is all you need to do.
To get detailed information about tips and techniques, visit our cryptocurrency page.
Stock Strategies
Stock trading strategies are dependent upon the same guidelines mentioned on this page. Hence, you can implement most of the policies that are given above. However, below are some specific stock trading strategies you can achieve.
Moving Average Crossover Strategy
There are three moving average lines that you require:
- One set is at 20 periods: It is your fast-moving average
- One group is at 60 periods: It is your slow-moving average
- One group is at 100 periods: It is your trend indicator
Above mentioned are the moving average crossovers that give a buying signal whenever a fast-moving average comes up and over the slow-moving average. You get a sell signal when the fast-moving average exceeds the slow-moving average.
So, you will open the position when the average line crosses one direction. Likewise, when it passes back oppositely, you will close the position.
How can one know that there is a trend on definitely? So you will know whether the trend is on by looking at the price bar on the platform. The trend is on if it is above or below the 100-period line.
To receive more information on tips and techniques for stock trading, visit our stocks and shares page.
Spread Betting Strategies
With spread betting, you can speculate numerous global markets without actually owning the assets. Moreover, these strategies are simple for traders to implement.
For more information on the best day trading strategies, visit our spread betting page.
CFDs Strategies
Developing effective day trading strategies is difficult. Hence, you can simplify the process by using instruments like CFD.
The concern of CFD is the difference between the entry and exit trade. Lately, using CFDs is increasing with time. The primary motivation is that traders profit from the movement of underlying assets without owning them.
To learn more about CFD-specific day trading tips and strategies, check out detailed information on the CFD page.
Regional Difference
There are different advantages and disadvantages of other parts. Day trading strategies for the Indian market may not work for the Australian market. For instance, some regions do not rely on market news, so these markets do not react as you want them to.
Another factor to consider is regulations. The trading strategies of the Indian market are in terms of the country’s rules, like high minimum equity balances in margin accounts. Therefore, check the regulations online to avoid receiving adverse effects after putting in hard-earned money.
You may discover that every country has its tax loopholes to pass through. If you live in the West and want to implement strategies of the Philippines, you must complete research beforehand.
What type of taxes will be waiting for you to pay? Will the fee be paid abroad or locally? The tax dissimilarities between countries can positively impact end-of-day profits.
Risk Management
Stop-losses – Implementing strategies can be risky. If you don’t know how to manage the risks, you will lose big in the future. Hence you should always make use of stop losses.
Although the prices may seem like they are going in the desired direction, they might reverse anytime. With stop losses, you may control this by exiting the trade. You will only face loss if the asset or security does not come through.
The famous, Savvy traders only risk 1% of their account balance per trade. Therefore, you can trade around £275 if you have £27,500 in your account.
Right Position Size – Position sizes are the number of shares on single trades. You must choose the right one by making a difference in entry and stop-loss prices. Suppose your entry price is £12 and the stop-loss is £11.80; you can risk £0.20 on each share.
Next is figuring out the number of trades you can take per trade and dividing £275 by £0.20. The maximum position size you can get is 1,375 shares for a 1% risk limit.
See if your asset has enough volume to take your position size. Additionally, do not get too large a position size. Also, if your position size is too large in the market, you will probably experience slippage on your entry and stop-loss.
Learning Resources
Videos – Some people prefer watching day trading strategies videos to learn them. Hence, most brokers offer different day trading strategies in detailed training videos. Visit their learning section to see what the site offers.
Online Blogs – Blogs are the best way to learn day trading strategies. These are free guides from experienced traders and are a great source of information and inspiration.
Forums – Some traders find forums the best way to learn. These enable people to interact and make precise queries. Also, day trading methods are easily accessible. As the forum is short, you do not get information much detail. Hence, in detail techniques, you must choose some other tool.
PDF Files – PDFs are the best way to get in-depth information on the best day trading strategies. These types of files are simple to follow. You can easily follow these guidelines on your candlestick charts while keeping the PDF guide open.
Another advantage of PDFs is that they can be found quickly and are specific. You can get the day trading strategies using price action patterns PDF download within seconds on Google. Hence, looking for some commodity or forex PDFs is not hard.
Moreover, they serve the needs of traders of all levels. Thus, PDFs are the most helpful source, be it an advance or a beginner in trading. You can search for day trading strategies based on your location, for example, day trading tips and techniques for India.
Guides – Books are the best source for more detailed information on tips and trading techniques. They are simple to understand and follow. Also, they explain with examples of intraday strategies.
- Simple Strategy: It is the best strategy for trading Stocks, Trading Futures, ETFs, and Forex, Mark Hodge.
- Details on Day Trading: It gives all information on the strategies, risk management, and traders’ psychology of day trading, Ross Cameron.
- Intra-Day Trading Strategies: Verifies steps for Trading Profits, Jeff Cooper
- Complete Guide: It is a Practical Guide from a Professional Day Trading Coach, Markus Heitkoetter.
- Stock Trading Wizard: These are advanced Short-Term Trading Strategies, Tony Oz
Thus, books and eBooks on day trading strategies are the best tools for efficient trading.
Courses – Traders find online courses as an interactive way to learn. There are so many courses on day trading strategies that you can find online. For example, studying day trading strategies for commodities will guide you through a crude oil strategy, FTSE, gap, and hedging strategies.
FX Day Trading as A Living
Are you looking to start trading as a source of living? Is it the best place for you? Then it would be best if you learned advanced risk and money management strategies while having a firm grip on your emotions.
To get more information on how to earn a living from day trading, check out our trading for a living page.
To Sum Up
The strategies that you put in use determine your end-of-day profits. Hence, remember that the more straightforward the plans are, the more successful they will be.
In addition to that, note that technical analysis is another thing that validates your strategy. So even if you go for early entry or end-of-day trading strategies, you must know how to manage the
In the end, developing and working on the strategies takes time; hence be patient.
Apply these strategies and wait for the profits.
We wish you happy Forex trading sessions!
