Home / Learn Forex Trading / Day Trading Strategies

Day Trading Strategies

FX Scouts By Jeffrey Cammack Updated: September 11th, 2019

These are the different strategies day traders use to make a profit, and the best brokers for day trading as being successful in day trading comes down to the combination of the trading conditions offered and the trader’s ability take advantage of market conditions.

Day trading is the buying and selling of Forex instruments, but all trades are opened and closed within the same trading day – profit is made from trading intraday market fluctuations.  While the advantage of day trading is that there is no overnight risk, profiting from a single trade over such a short period of time can be tricky.

Day trading also involves placing multiple trades at a high frequency. This means effective personal discipline, sound risk management, and a reliable direct-market-access (DMA) broker are all essential.

Top DMA Day Trading Brokers

Broker Min. Deposit Min. Spread
IC Markets $200 0.1 pips Visit Website Read Review
Pepperstone $100 0.0 pips Visit Website Read Review
Admiral Markets $200 0.1 pips Visit Website Read Review
Go Markets $200 0.2 pips Visit Website Read Review
Amana Capital $200 0.1 pips Visit Website Read Review
FP Markets $100 0.1 pips Visit Website Read Review
FXTM $10 0.1 pips Visit Website Read Review

How to Day Trade Successfully?

  1. Day traders need discipline – your strength of self-control can determine your success as a trader. You need to wait patiently for the market to create an opportunity – and sometimes there will be no opportunities.  You also need to have the discipline to not let your emotions get the better of you following a loss – emotional trading decisions are less sensible and will further damage your account balance.
  2. Using a tight stop loss is also essential to your survival as a day trader. Like with any trading style, you’re going to have bad days.  This is more the case with day trading because day traders are trading with higher frequency. With more frequent trader there will be more losing trades, so using a protective stop loss will prevent larger disasters.
  3. Have a strategy.  Don’t trade without a strategy.

Day Trading Strategy

The vast majority of people lose when day trading because they lack a robust strategy. A day trading system is absolutely necessary, or you will find yourself making emotional trading decisions in a volatile market and consequently doing serious damage to your account balance.

Day trading strategy focuses on two critical factors: volatility and liquidity.

Day traders are highly dependent on volatility to generate intraday price swings to make a profit.

Market volatility is not equally spread across the trading day – the opens of the major trading sessions (such as London and New York) tend to produce the most volatility. Market liquidity will increase alongside volatility as the surge in buying and selling takes place.

Any successful day trading strategy will take require monitoring the market at times of high volatility for patterns to take advantage of.

Day Trading Patterns

As a day trader, you should only focus on low-risk, high-reward opportunities.

Since day trading is dependent on volatility, you should focus on volatility patterns as these will yield the best results. A typical volatility pattern is the breakout of a congestion zone.

Since volatility doesn’t have a directional component, the trader has to develop a directional bias – or determine the direction of the market.

If our trading system confirms that there’s going to be increased volatility in the direction of our directional bias, this will create an opportunity for a trade with a decent risk to reward ratio.

Day Trading Cryptocurrency CFDs

Cryptocurrency CFD trading seems to be the ideal market for day trading since volatility is the main characteristic of this relatively new market.

The cryptocurrency market is considered a high-risk CFD market because there are few market controls, which makes it more unpredictable.

The advantage of having 20%, 30% and even 50% swings every single day means that there are a lot of day trading opportunities, but depending on your directional bias, this could cause huge losses.

Because it is so unpredictable, any trader trying to profit from the cryptocurrency market needs to be an experienced technical trader. It requires rigorous risk management and the constant monitoring of all open trades.

Is it possible to day trade for a living?

There are certainly less stressful ways to make money than day trading. This form of trading is not for the faint of heart. Be prepared for the difficult emotional experience of losing money on a regular basis.

You want to make sure you’ve got a proven trading edge before adventuring into this business.  Some people who day trade do so as a group where they share tips and opportunities, all while keeping their accounts and profits separate.

But day trading for a living is possible and is a viable career if you have the right personality characteristics. These include decisiveness, quick-thinking, discipline and perseverance.

If you recognise some of these personality traits in yourself, then day trading for a living might be a great career option for you.

Share your knowledge

Stay updated

This form has double opt in enabled. You will need to confirm your email address before being added to the list.

Trading Forex and CFDs is not suitable for all investors and comes with a high risk of losing money rapidly due to leverage. 75-90% of retail investors lose money trading these products. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.