Trading Training: 5 Key Day Trading Strategies for Beginners

Are you interested in launching a career as a day trader but aren’t sure how to get started?

Day trading can be a very lucrative career, with some people earning well into the six figures. However, if you don’t have day trading strategies developed, you could end up losing a lot of money. 

Before you dive into the world of day trading, check out our top day trading strategies. 

1. Trend Trading 

With this day trading strategy, you attempt to earn money by studying the direction of asset prices. Then, you buy or sell depending on which direction the trend takes. 

For example, if the trend goes upward with prices getting higher, then day traders would take a long position and purchase the asset. If the trend goes downward, then day traders would take a short position by selling. You can check out to learn more about this day trading strategy. 

2. Scalping 

Scalping is a strategy that involves making small but frequent profits in the short term. With this strategy, you focus on achieving a high win rate. 

The theory behind scalping is that you can just as easily build a trading account by making smaller profits over and over again. To be successful at scalping, you need to have a quick exit strategy, as your losses can very quickly counteract your profits. 

Most scalpers tend to close their positions before the end of the day because the small profit margins from trades can quickly erode overnight. 

3. Swing Trading

To succeed at swing trading, you need to take advantage of short-term price patterns. Instead of making money from prices going one direction in a trend, swing trenders look to make money from the up-and-down movements of prices that occur in a short time frame. 

As a swing trader, you’ll need to spot the small reversals in the market’s price movement ahead of time. The sooner you recognize a trend, the more profitable your trade will be. 

When swing trading, it can also be tempting to move from stock to stock. While it’s fine to do this from time to time, you should stick to a core group of stocks that you learn to understand and track daily. 

4. Mean Reversion  

The mean reversion theory essentially states that prices always eventually move back toward their historical mean. To be successful at this day trading strategy, you’ll need to apply technical analysis to track assets whose recent performances have considerably differed from their historical average. 

You will then take advantage of the stock’s return to its normal trajectory. 

5. Money Flows 

With this day trading strategy, you compare the number of trades from the previous day to the current day to figure out if an asset is being oversold or overbought. 

With this information, you can figure out if the money flow was negative or positive. If the asset was overbought, then that’s a signal for you to sell. If it was oversold, then that’s a signal for you to buy. 

Day Trading Strategies: Time to Act 

Now that you know about the different day trading strategies, it’s time to dip your toes in the market. We recommend starting small, and as you learn the basics of day trading, you can start making trades for higher profits. 

Check back in with our blog for more trading strategies. 

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