A Guide to Day Trading Strategies

There are countless day trading strategies to choose from, and it comes with good reason considering investors are constantly searching for ways to beat the market and turn a plentiful profit.

“If I have positions going against me, I get right out; if they are going for me, I keep them. Risk control is the most important thing in trading,” says billionaire hedge fund manager Paul Tudor Jones. “If you have a losing position that is making you uncomfortable, the solution is very simple: get out, because you can always get back in.”

Moreover, in order to get traders one step closer to making the most of their working hours, we’ve compiled this guide to day trading strategies that every beginner should know.

Scalping

Scalping is when a trader attempts to open and close positions in very brief periods of time in markets such as foreign exchange and securities with the aim of making a small profit from the trades. This strategy is attractive because it exposes traders to less risk, offers a greater number of trading opportunities, and is easily accessible given one has the right tools – such as a live feed, a great broker, and the level of concentration (not to mention, emotional wherewithal) necessary to place many trades.

Momentum

Momentum investing is a system of capitalizing on stocks or other securities that have had high returns over the past three to twelve months by entering a trade as it continues an upwards trend, and transversely, selling those that have had poor returns over the same period. Traders utilize chart patterns, current events, price and value analytics, as well as numerous other factors when practicing this strategy, which hinges on the belief that identifiable trends will continue to head in the same direction somewhat based on the stock’s overall positive or negative momentum.

Pullback

A pullback is a temporary pause or dip in an asset’s overall upwards trend. In terms of technical analysis, these occurrences generate all sorts of trading opportunities after the active trend thrusts higher or lower. For example, as seen on the graph above, one could employ a strategy of buying amidst the valleys and selling at the individual peaks, or just buying at a low point and holding throughout the larger momentum upswing, etc.

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Legal Disclaimer: I am not a certified financial planner/advisor nor a certified financial analyst nor an economist nor a CPA nor an accountant nor a lawyer. I am not a finance professional through formal education. This Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.

If you enjoyed this guide to essential day trading strategies, be sure to check out our list of Day Trading Rules That Beginners Should Know!