Day Trading Strategies for Beginners

Day Trading Strategies for Beginners

Day trading is the practice of buying and selling financial instruments, such as stocks, stock options or equities, within the same trading day and to have your positions closed before the market close for the day. Day trading used to be exclusive to financial firms and professional investors, but the advance of technology has seen the growth of day traders working at home.

With its quick returns, day trading is very profitable when you do it right. But its highly volatile nature can also make you extremely unprofitable. It can be a difficult skill to master, over 90% of those who tried fail. But don’t let the odds beat you. By learning intraday trading strategies and techniques, and by practicing continuously, you can become one of the few who are making millions of dollars per year.

There are several intraday trading strategies and styles. Beginners usually start with “Trend Following”, assuming that the financial instruments that are rising will continue to rise and the financial instruments that are falling will continue to fall.

Other strategies for beginners are “Range Trading” and “Contrarian Investing”. “Range Trading” is assuming that the financial instruments’ price is within certain range; every time they hit a high, it falls back to the low, and vice versa. Thus traders buy long when the price is at the lower end and sell short when price is at the upper end. While “Contrarian Investing” is a strategy that assumes that prices that is rising or falling will go to the opposite direction eventually, thus trading in the opposite direction.

With more confidence, you can try “Scalping” or “News Playing”. “Scalping” is a strategy where you exploit the inefficiency of the market by taking profit where small price gaps happens between the bid and ask prices. News Playing is another strategy where you anticipate the market’s reaction based on the recent news or rumors of a certain financial instrument while bearing in mind that sometimes the market’s reactions are not always match with the tone of the news.

With more understanding of how the market works, you can also try “Price Action”. “Price Action” is a trading strategy in which you are keeping data of price movement, chart patterns, and other market data and use the combination of them to determine whether to make trade or not.

Not all strategy works for everybody and in every market. To maximize your profit, you need to know which day trading strategies works best for you and your characteristic.