The Best Day Trading Strategy PDF Guide for Beginners
If you are someone who can take a high number of risks in a short time, or you enjoy the thrills of getting instant rewards and feedback from highly risky adventures, are unable to stay too long waiting or expecting something, or are eager to quickly cash in on your profits then day trading is for you. In the next paragraph, you should know why, as I will be giving an easy-to-understand definition of day trading.
What is Day Trading
Day trading is simply a financial trading strategy in which traders buy and sell one or more financial instruments within the same trading day using smaller timeframes ranging from 1 minute to 4 hours. This approach is characterized by its quick decision-making and hands-on involvement in the market. It carries a higher level of risk and also has a higher chance of loss as traders most times take their trades at the spur of the moment.
Day trading stands apart from other trading styles, notably swing trading and position trading this is because while swing traders hold positions for days or weeks to capture price swings, and position traders take a longer-term investment approach, day traders seek to capitalize on intraday market fluctuations. Day trading has its advantages as well as its disadvantages. Let’s take a look at some of the benefits of day trading.
Meaning of Day Trading Strategy:
Day trading strategy is simple the trading strategy day traders make use of in their day-to-day trading activities. There are different types of day trading strategies and in this day trading strategy pdf guide, I will give us some examples of common day trading strategies and will also show you one of the best day trading strategies you can use for your day trading.
Common Day Trading Strategies
When day trading, you would need strategies that will help make your trading experience worthwhile and profitable, these strategies would then be mastered over time. Here I will mention some of the most common day trading strategies available or mostly used by day traders.
- High-Frequency Trading
- News Trading
- Range Trading
This type of trading is mostly automated, which means it involves the use of trading robots, expert advisors (E.A) and algorithmic trading to carry out high-level trades exploiting the inefficiencies in the market within short periods. This can only be done by automation, as it is very difficult for individual traders to easily spot these short market inefficiencies.
Scalping is a popular day trading technique employed by traders to make swift profits by buying or selling currency pairs within a short holding period. A scalper seeks to capitalize on the frequent small price fluctuations that occur throughout the day, making numerous trades in the process. They make use of the smallest timeframes making it easy to spot very short-term opportunities. The most commonly used timeframe for scalping ranges between 1 minute to 15 minutes timeframe.
Another day trading strategy is news trading, but this type of strategy limits the number of times the day trader takes his trade to the news available. It is also a very useful day trading strategy as the trader waits for trade opportunity that comes from news and event updates which most times causes volatility in the market for some time during the day.
The trader capitalizes on these periods to make multiple market entries and can make either a lot of profit within the news day or incur losses.
Range trading strategy is one of the most basic day trading strategies we have, as it involves pure price action. While carrying out range trading, the trader actively makes use of the support and resistance level at a particular zone and this is very effective when carrying out intraday trading. The trader waits for the price to get to a resistance level, where they instantly sell and when it gets to the support level they buy.
To confirm that a financial instrument or the financial market is currently ranging, you need to ensure that the support and resistance level within the current price zone has been tested and retested multiple times, over some time.
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The Best Day Trading Strategy to Use in 2024
Now, I will be giving a practical illustration of one of the best day trading strategy, giving you a step-by-step approach on how to also use this strategy in your day trading adventure as that is the most important purpose of this day trading strategy pdf guide.
So, in this strategy, I will be using the 15-minute chart for my entries, and the four-hour chart to get my major areas of value you can never forget your risk management strategy which is very important to becoming a profitable trader. Therefore I will be using a positive reward-to-risk ratio.
I have been able to create a trading strategy combining the strategy with my day trading process which I am now giving to you since you are interested in using the day trading approach in your trading journey.
As I provide you with a step-by-step guide to mastering this day trading strategy, I would love for you to subscribe to our newsletter for more article updates and also do well to share the article with your friends and community if you find this useful.
Let’s get started. Right now we’re looking at the Aussie dollar in the chart below. The first step in this strategy is going to be finding prominent and major areas of value on the four-hour chart.
Now, unfortunately, this is one of the most subjective parts of this strategy and there’s no way to have absolute set-in-stone rules for identifying areas of value and levels of structure. So for that reason, I’m going to be showing you exactly what I look for when using this day trading strategy right now.
You should also understand that just like any other strategy, you only get better at it with experience. Now for me, looking at the Australian dollar in the diagram below where price currently sits, one thing is for sure here, and that is the fact that price is going to do one of two things. Price is either going to go higher or lower.
That’s the only two things Price ever does. So with that being the case, the question you have to ask yourself is, if the price goes higher, what is the most prominent level of structure that you see? The rules for this, although they can’t be set in stone, are laid in the way the zone is drawn.
Now to identify and draw the zone, you need to look for a recent area of structure that’s been tested multiple times, and looking at the diagram below that area most obviously is the area indicated with the horizontal line.
We have a level of structure that has pushed prices around multiple times as indicated in the diagram above. So if the price heads higher, I know this area and it’s not just that straight line but it’s more of an area or a zone as indicated with the rectangle, is going to be an area I will look at for possible sell trades. I hope you are still with me on this one. The other thing the price can do is that price can push down.
If price pushes down, still looking at the diagram above, where do you see as the most prominent and major area of value that price is going to hit? If you were able to point this level out, then that’s great, if you weren’t there is no need to panic, you will soon become familiar with the process.
Looking at the chart above, right here we have another level that has very obviously pushed prices around in a major way throughout the past. With that being the case, I know if the price pushes lower, I’m going to be looking in this zone again, it’s no longer a straight line but a zone as indicated in the diagram above with the rectangular shape. This zone indicates a possible buying opportunity in our day trading strategy.
So I just wanted to show you how can identify major levels of structure before we go over the full strategy. Now let’s go ahead and take a look at an example of the full strategy just in case you didn’t properly understand the previous illustration.
Now, looking at the diagram above you should notice we are on the euro yen (EurJpy) and we’re looking for major areas of value from where the price is right now. The current price is indicated in the diagram above. Now remember what I said earlier, price can do one of two things. It’s either going up or going down. If it goes up, what’s the major area of value that you see on the chart?
Looking at the diagram above, you should see the major area of value that is highlighted on the chart above, considering that this is the area that pushed the market around the most.
Now what’s the second thing price can do? Price could go down let’s also if there is any prominent area of value to identify considering that price might go down. We do have a prominent level as you can see it identified in the diagram below.
To read the full article, you can download the day trading pdf guide using the button below this paragraph or the download button below the pdf file viewer above. You can also read the full article on our website by clicking on this link.
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