Day Trading Strategies

Is it possible to day trade for a living? This really depends on how much money you need to live. I usually advise that the best thing to do is to figure out some ways that you can day trade, but still make money doing other things.

If you day trade using real money and you lose your hard earn money, it will be a very hard emotional experience. You want to make sure you’ve got a proven trading edge before adventuring into this lonely business.  Some people who day trade do so as a group where they share tips and help each other, all this time keeping their accounts and profits separate.

Having said that, day trading for a living is possible and is a perfectly viable career if you have the right type of personality. These are some of the main personality traits of a good daytrader: decisiveness, the ability to think quickly, discipline and persistence.

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

What is Day trading and How it Works?

Technically, day trading is a method of trading that attempts to profit from the intraday market fluctuations. Basically, all trades are open and closed within a period of a day. The advantage of day trading is that you’re not taking an overnight risk; however, the main disadvantage is that you can only capture the price move that happens during that day.

In essence, day trading involves taking multiple trades in a day and the trades tends to happen more frequently than with other trading methods.

Top Day Trading Brokers

How to Day Trade Successfully?

  1. You need is discipline. Discipline is the most significant factors that can determine your success as a trader. You need to be able to sit on your hands and have the patience to not want to force and impose your will on the market.  Because sometimes there are just no trading opportunities.  You also need to have the discipline not to revenge trade after a losing trade.
  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.  But this is, even more, the case with day trading because you’re trading more frequently. If you’re trading more frequently, you’re going to have more losing trades, so you need to use a protective stop loss to protect yourself against losing an entire month of profits on a single bad trade.
  3. Have a strategy.  Don’t trade without a strategy.

Day Trading Strategy

The lack of a robust day trading strategy is another reason why the vast majority of people lose at day trading. You need to develop a daily trading routine to survive in the markets, otherwise, when you’re in the heat of the battle, it will be hard to execute your trading plan.

As a day trader, you really need a strategy that focuses on two critical factors: volatility and liquidity. Day traders are far more dependent on volatility because without the volatility and intraday price swings there is no other way to make money.

The volatility is not equally spread across the trading day. The major trading sessions like the London and the New York session tend to produce the most volatility, so you want to develop a day trading strategy that focuses on those times of the day.

Day Trading Patterns

There are many day trading patterns you can trade in the market; however, you should only focus on those trade setups that can provide you with a low risk, high reward opportunity.

Since day trading is so dependent on volatility you need to focus on volatility patterns as those tend to yield the best results. A typical volatility pattern is the breakout of a congestion zone. Since volatility doesn’t have a directional component, it’s your job to develop a trading bias and determine whether the market is going up or down.

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

Day Trading Crypto

Cryptocurrency trading seems the ideal market for day trading since the volatility is the main characteristics of this relatively new market. The advantage of having 20%, 30% and even 50% swings every single day means that there are a lot of day trading opportunities to benefit from.

The easiest way to speculate on the intraday price fluctuations in these cryptocurrencies is by using CFDs, which allows you to go both short and long.

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.
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