Which Day Trading Strategy is Right For You?
Which Day Trading Strategy is Right For You?
Day trading strategies are important if you’re looking to capitalize on minor, frequent price fluctuations. Such a strategy relies heavily on in-depth, technical analysis, using technical indicators, charts and patterns to anticipate future price moves. This form of trading is characterised by quick price changes that often occur several times per day. Traders who employ this strategy often profit from small, quick price fluctuations, as well as from the ability to capitalize on the news or economic reports that affect the markets. It can be a highly profitable and lucrative way to trade, but there are certain steps you should take to make sure you’re successful.
One of the most basic trading strategies that you can use is the Moving Average Convergence/Divergence, otherwise known as MACD. MACD uses moving averages, which are typically lagging indicators, to help traders determine market direction. Using moving averages with a constant closing price and a trending price, MACD can help determine if a trend is going to continue or if a change is about to occur.
Moving averages are one of the simplest of all day-trading strategies to implement. There are a number of different MACD software programs available, including those created by Forex pros and Day Trading Coach members, which allow you to customize the program to target specific stocks and market sections. The use of moving averages gives traders a great tool for predicting where the market will go before it happens and gives them an excellent advantage over other traders who don’t take the time to fully understand this important market category.
Another common day trading strategy used is the Technical Analysis indicator. This form of analysis is very simple, but provides traders with a great deal of leverage. By effectively combining several different technical indicators, you can gain a great advantage over the competition by improving your understanding of stock charts. While the use of many of the popular trading strategies can give you an edge in the market, using a single consolidated strategy can put you at the top of the field.
Other common trading styles include the chart formations known as the OHLC and UPLC. OHLC charts look like a bar chart, but contain only the first five bars, representing the open Highs, the lower highs, the open lows, and the daily closing price. UPLC is similar, except it doesn’t display the opening and closing prices. Instead, it substitutes the open High with the previous closing price and uses the area between the two bars to show the range of activity in the stock. Both of these trading styles are great tools for helping to identify breakout trends, especially in the volatile market of stocks.
One final popular method is the mathematical formula based on Fibonacci numbers. These strategies are often used as indicators, or are part of other trading styles, such as the Technical Analysis style. In order to use the mathematical formula, you must have access to a price chart of at least five different companies, and must know exactly when the closing prices were. If the price closes above or below the value and stays within a certain range, this is an indicator that a trend is developing. It might take a little work to find the best using a simple price chart, so most investors will find it easier to use one of the indicators described above.
There are also many indicators based on pivot points. A pivot point is one of the most important trading techniques for predicting price direction. Trading with a number of different indicators based on pivot points allows you to draw trendlines that are extremely powerful indicators of future movement. Pivot points are easy to understand and can be found on many popular charts. Once you learn how to use all of these indicators to their fullest potential, you’ll find yourself becoming a trader‘s superstar in no time at all.
Of course, all of these strategies can be used together or independently, or you could employ more than one of them. What matters most is that you find a trading style that suits your personality. Day trading strategies by definition don’t allow for long term planning, so if you don’t plan on sticking around the markets for very long, you should probably keep your options open regarding which strategy to use. However, if you’re willing to put in the time and effort required to effectively plan out your trades using any of the more efficient methods described above, there is no better way to make a living from the stock market than by using a good day trading strategy.