Day trading strategies help you capitalise on small price movements in the market for a day. Ideal for traders who don’t wish to hold a position for too long, the right day trading strategies can help you identify ideal entry and exit points in the market.
What is day trading?
Day trading refers to the practice of buying and selling assets within a trading day. Day traders intend to earn small profits in multiple trades. Short-term charts are used to analyse the market movement, and traders hold positions over a few minutes to a few hours.
Top day trading strategies for beginners
Scalping is one of the most famous day trading strategies in the financial market. Short-term trades are placed to profit from the smallest price changes. When traders scalp, they aim to gather small profits from every trade and accumulate them into a considerable amount at the end of the day.
2. Breakout trading
A breakout trading strategy can be used as soon as an asset’s price exceeds the previous highest resistance. Traders go long after a breakout by monitoring the asset volume in the market and amplifying their profits.
3. Reversal trading
A reversal trading strategy is used by the traders that aim to trade against the current market trend. This is the opposite of trading a breakout. If the trend reverses from an upward trend to a downward trend, it provides traders with an ideal entry point to go short.
Technical charts can be used to analyse price movements and trends. It is recommended to look for a trend with at least two successive low or high price movements before placing a trade.
4. Pivot point trading
Pivot points in day trading help traders determine the overall market trend in different time frames. It provides you with the average low, high, and closing prices of an asset. Some traders enter the market as soon as the asset price touches the pivot point and bounces in a favourable direction.
5. Momentum trading
A momentum trading strategy helps you trade in the direction of the market. With the help of news announcements, substantial trading moves are identified. Assets that move drastically in your favour during the day provide you with trading opportunities. Any asset moving 20-40% witnesses major price moves and can be made profitable with the help of momentum trading.
6. News trading
News announcements can affect an asset’ movement in the market. It can also give you an idea about future price movements. For example, a news announcement of the British economy gaining strength can drive up the price of USD/GBP, which you can take advantage of.
7. Swing trading
Swing trading allows you to trade in both falling and rising markets. It is done by studying price charts and analysing each price movement. Traders hold onto a position with an expectation to profit from the price swing on a particular day. Strong trends enable traders to enter the market in the trend’s direction. Alternatively, the swing trading strategy tells traders to hold onto their current positions until the market regains its strength.
8. End of day trading
End of day trading involves entering the market near its closing. As soon as it becomes evident that prices are going to settle at one position, end of day traders become more active to place their trades. Since they watch price movements and charts all day, it becomes easier for them to decide on ideal entry and exit points near the market’s closing price.
9. Fade trading
Fade trading or fading is the shorting of assets after a strong upward movement. Traders assume that in such a situation, the market is overbought, so they take an opposing position to the market’s trend direction. The trades are placed against the current trend to profit from a price reversal.
10. Pullback trading
A pullback trading strategy refers to a pause in an asset’s price after it witnesses peak pricing in a continued uptrend. It enables you to profit from a drop in price that persists for a short duration before an uptrend takes place again.
11. Trend trading
Trend trading involves following the trend of a market, whether bullish or bearish. Traders go short in downtrend and go long in an uptrend to profit from rising and falling markets.
12. Range trading
Range trading involves trading within a given range at a certain timeframe. When a market is in range or sideways, it means that there is indecision between buyers and sellers. Thus, there is no clear uptrend or downtrend in the market.
With range trading, you can enter the market at support and sell at resistance. Range trading can be done in several time frames – from a few minutes to several hours and even months.
13. Spot trading
Transactions executed in spot trading are settled instantly. It involves buying an asset at the existing market rate. Spot traders earn profit by holding onto a position once more buyers enter the market then selling once the market slows down.
14. Margin trading
Margin trading allows you to open a position with a smaller deposit. With margin trading, you increase your exposure in the market and trade amounts greater than what you actually have in your account. As soon as you close the position, you’ll need to return the borrowed sum to your broker.
15. Volatility trading
Volatility trading involves predicting if an asset will see any form of movement instead of trading the actual price. Trading in a volatile market can be highly profitable but it can also amplify losses.
16. Moving average trading
The moving average trading strategy allows you to find the average price of an asset and smooths out unnecessary price swings during the day. The average can be taken any time, ranging from a few minutes to several hours. The average price can be calculated either by using the simple moving average or the EMA.
Start day trading with $100
Day trading strategies can be applied to trading strategies whether you are a beginner or an experienced trader. With Blueberry Markets, you can analyse several charts, price movements, and market trends in a powerful MT4/MT5 platform.