Trading Strategies – forex trading advices

Day Trading Strategies

A robust trading strategy is vital for capitalizing on intraday price movements. Successful traders typically rely on comprehensive technical analysis, studying charts, indicators, and patterns to identify potential market opportunities.

I’ve kept the core message while making it more balanced and precise. Would you like me to add specific details about technical analysis methods or risk management principles?

Note: While I’m happy to discuss trading strategies and analysis methods, it’s important to remember that day trading carries significant risks, and past performance doesn’t guarantee future results.

This guide explores trading approaches for all experience levels, from foundational concepts to advanced technical analysis and market-specific techniques. Each section builds upon core principles to help develop a comprehensive understanding of market analysis.

This guide addresses regional market variations and provides valuable resource recommendations. However, trading success ultimately depends on developing an approach that aligns with your personal risk tolerance, schedule, and analytical strengths

Quick Introduction

Make sure your broker is compatible with strategy-based trading. Look for platform support for features such as:

Excellent trade execution quality – (read why execution speed is not the only thing to consider),
Price action data ( + Level 2 if possible),
Ability to trade direct from graphs,
Trade automation,
Stop losses and take profit orders,
Platform reliability

Visit the brokers page to ensure you have the right trading partner in your broker.

Best 4 Brokers Suited To Strategy Based Trading

Based on our experts’ tests, these brokers offer the best conditions, tools and environment for strategy-based trading:

Click a broker for details

JUSTMARKET

ROBOFOREX

EXCLUSIVE MARKET

Deriv.com

Trading Strategies for Beginners

Before you get bogged down in a complex world of technical indicators and charting jargon, focus on the basics of a simple day trading strategy.

Many make the mistake of thinking you need a highly complicated strategy to succeed intraday, but often the more straightforward, the more effective.

A strategy should first and foremost simplify decision making. Trade size, opening prices and exit strategies all become streamlined when viewed within an overall strategy.

The Basics

Incorporate the invaluable elements below into your strategy.

Money management – Before you start, sit down and decide how much you’re willing to risk. Bear in mind most successful traders won’t put more than 2% of their capital on the line per trade. You have to prepare yourself for some losses if you want to be around and successful, long term.
Time management – Ensure any time allocated to trading is used efficiently. Time is money.
Start small – Whilst you’re finding your feet, stick to a maximum of around 3 assets or markets during a single day. It’s better to get really good at a few than to be average and making no money on too many.
Education – Stay up to date on any core markets, but equally, learn to separate ‘noise’ from ‘signal’.
Consistency – It’s harder than it looks to keep emotions at bay when you’re five coffees in and you’ve been staring at the screen for hours. You need to let maths, logic and your strategy guide you, not nerves, fear, or greed.
Timing – The market will get volatile when it opens each day and while experienced day traders may be able to read the patterns and profit, you should bide your time. So hold back for the first 15 minutes, you’ve still got hours ahead.
Demo Account – A must-have tool for any beginner, but also the best place to backtest or experiment with new, or refined, strategies for advanced traders. Many demo accounts are unlimited, so not time restricted.

Components Every Strategy Needs

Whether you’re looking for automated day trading strategies or tactics for beginners and advanced traders, it’s crucial to consider three essential components: volatility, liquidity, and volume.

If you’re to make money on tiny price movements, choosing the right stock is vital. These three elements will help you make that decision.

Liquidity – This enables you to swiftly enter and exit trades at an attractive and stable price. Liquid commodity strategies, for example, will focus on gold, crude oil and natural gas.
Volatility – This tells you your potential profit range. The greater the volatility, the greater profit or loss you may make. The cryptocurrency market is one such example well known for high volatility.
Volume – This measurement will tell you how many times the stock/asset has been traded within a set period of time. For day traders, this is better known as ‘average daily trading volume.’ High volume tells you there’s significant interest in the asset or security. An increase in volume is frequently an indicator a price jump either up or down, is fast approaching.

5 Day Trading Strategies

The following strategy ideas rely on charting techniques. They can be tweaked and amended to suit a range of markets and assets.

1. Breakout

Breakout strategies centre around when the price clears a specified level on your chart, with increased volume. The breakout trader enters into a long position after the asset or security breaks above resistance. Alternatively, you enter a short position once the stock breaks below support.

After an asset or security trades beyond the specified price barrier, volatility usually increases and prices will often trend in the direction of the breakout.

You need to find the right instrument to trade. When doing this bear in mind the asset’s support and resistance levels. The more frequently the price has hit these points, the more validated and important they become.

Entry Points

This part is nice and straightforward. Prices set to close and above resistance levels require a bearish position. Prices set to close and below a support level need a bullish position.

Plan your exits

Use the asset’s recent performance to establish a reasonable price target. Using chart patterns will make this process even more accurate. You can calculate the average recent price swings to create a target. If the average price swing has been 3 points over the last several price swings, this would be a sensible target. Once you’ve reached that goal you can exit the trade and enjoy the profit.

2. Scalping

One of the most popular strategies is scalping. It’s particularly popular in the forex market, and it looks to capitalise on minute price changes. The driving force is quantity. You will look to sell as soon as the trade becomes profitable. This is a fast-paced and exciting way to trade, but it can be risky. You need a high trading probability to even out the low risk vs reward ratio.

When considering scalping, it is important to check your broker permits it.

Be on the lookout for volatile instruments, attractive liquidity and be hot on timing. You can’t wait for the market, you need to close losing trades as soon as possible.

3. Momentum

Popular amongst trading strategies for beginners, this strategy revolves around acting on news sources and identifying substantial trending moves with the support of high volume. There is always at least one stock that moves around 20-30% each day, so there’s ample opportunity. You simply hold onto your position until you see signs of reversal and then get out.

Alternatively, you can fade the price drop. This way round your price target is as soon as volume starts to diminish.

This strategy is simple and effective if used correctly. However, you must ensure you’re aware of upcoming news and earnings announcements. Just a few seconds on each trade will make all the difference to your end of day profits.

4. Reversal

Although hotly debated and potentially dangerous when used by beginners, reverse trading is used all over the world. It’s also known as trend trading, pull back trending and a mean reversion strategy.

This strategy defies basic logic as you aim to trade against the trend. You need to be able to accurately identify possible pullbacks, plus predict their strength. To do this effectively you need in-depth market knowledge and experience.

The ‘daily pivot’ strategy is considered a unique case of reverse trading, as it centres on buying and selling the daily low and high pullbacks/reverse.

5. Using Pivot Points

A day trading pivot point strategy can be fantastic for identifying and acting on critical support and/or resistance levels. It is particularly useful in the forex market. In addition, it can be used by range-bound traders to identify points of entry, while trend and breakout traders can use pivot points to locate key levels that need to break for a move to count as a breakout.

Calculating Pivot Points

A pivot point is defined as a point of rotation. You use the prices of the previous day’s high and low, plus the closing price of a security to calculate the pivot point.

Note that if you calculate a pivot point using price information from a relatively short time frame, accuracy is often reduced.

So, how do you calculate a pivot point?

You can then calculate support and resistance levels using the pivot point. To do that you will need to use the following formulas:

The second level of support and resistance is then calculated as follows:

Application

When applied to the FX market, for example, you will find the trading range for the session often takes place between the pivot point and the first support and resistance levels. This is because a high number of traders play this range.

It’s also worth noting, this is one of the systems & methods that can be applied to indexes too. For example, it can help form an effective S&P day trading strategy.

Limit Your Losses

This is particularly important if you’re using margin. Requirements for which are usually high for day traders.