Day Trading Strategies

By John Taylor

"Day Trading Strategies: Proven Techniques for Maximizing Profits in Day Trading" is your essential guide to understanding and implementing effective strategies for navigating the fast-paced and dynamic world of day trading. This book equips you with the knowledge and tools to develop a successful day trading approach and maximize your trading profits.

Inside this comprehensive guide, you'll discover:

Day Trading Fundamentals: A clear and concise introduction to the foundational principles and terminology of day trading.

Technical Analysis: Insightful guidance on leveraging technical indicators and chart patterns to identify profitable trading opportunities.

Risk Management Techniques: Strategies for managing risks, setting stop-loss orders, and implementing effective risk management plans.

Market Volatility and Trends: Understanding market volatility and identifying trends to capitalize on profitable intraday trading opportunities.

Leverage and Margin Trading: Explorations of leveraging techniques and margin trading strategies, including their benefits and risks.

Trading Psychology: Techniques for cultivating a disciplined mindset, managing emotions, and making rational trading decisions.

Scalping and Momentum Trading: Strategies for scalping and momentum trading, including tips for identifying entry and exit points for quick profits.

Market Liquidity and Order Execution: Understanding market liquidity and optimizing order execution to ensure successful trades.

Algorithmic Trading: An overview of automated trading strategies and their role in modern day trading practices.

Real-Time Trading Simulations: Practical exercises and simulations to apply your newfound knowledge and refine your day trading skills.

"Day Trading Strategies" is more than just a book; it's your roadmap to becoming a successful day trader in the fast-paced world of financial markets. Whether you're a seasoned trader, a financial professional, or a beginner exploring the world of day trading, this guide provides the tools and expertise to navigate the complexities of intraday trading with confidence and precision.

 

• Language: English
• Publisher: John Taylor
• Release date: Mar 24, 2024
• ISBN: 9798224071968

Book preview

John Taylor

DAY TRADING STRATEGIES

Copyright © 2023 by John Taylor

All rights reserved. No part of this publication may be reproduced, stored or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise without written permission from the publisher. It is illegal to copy this book, post it to a website, or distribute it by any other means without permission.

First edition

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Contents

Keeping Track of Your Day Trades

Chapter 1: Become Familiar with The Market

Chapter 2: Risk Management in Day Trading- Stop Loss and Take Profit

Chapter 3: Qualitative and Qualitative Risk

Chapter 4: Is Day Trading a Real Business Option?

Chapter 5: Technical Analysis

Chapter 6: Important Consolidation Chart Patterns

Chapter 7: Connection with Fundamental Analysis

Chapter 8: Range Trading or Channel Trading

Chapter 9: News Trading

Chapter 10: Trades in Currency Pairs

Chapter 11: Intraday Scale

Chapter 12: Breakout

Chapter 13: Options Market Application

Chapter 14: Market Mood Swing Analysis

Chapter 15: Option Trading Strategies

Chapter 16: Futures Market Application

Chapter 17: Which Market to Trade and With Whom?

Chapter 18: Application on Stocks

Chapter 19: How Does the Market Work?

Chapter 20: Forex Market Trading Platforms Application

Chapter 21: Commodities Market Application

Chapter 22: Crypto Value Market Application

Chapter 23: Top Day Trading Tools

Chapter 24: Trading in Momentum

Chapter 25: Avoiding Common Day Trading Mistakes

Chapter 26: Portfolio Diversification

Chapter 27: Options Day Trading Success Rules

Chapter 28: Trading with The Trend

Keeping Track of Your Day Trades

It’s always interesting when two-day traders choose the same stock - one short and one long.

More often than not, both traders become successful, demonstrating that trader management and expertise are more significant than the trader’s stock and plan.

Remember that the amount of your transaction will be determined by the stock’s price as well as your account and risk management. Day traders who are just starting out should keep their share sizes around 1000.

For example, you may acquire 800 shares and then sell half of them in the first goal. Bring your stop loss up to break even. Then you may sell 200 more in the following goal. You may maintain the last 200 shares till you decide to quit. You may always hold some shares in case the price continues to move in your favor.

IMPORTANT: Professional day traders never put all of their shares in danger at once.

They understand how to scale into the transaction, which means they acquire shares at various times. They may begin with 200 shares and gradually increase their holdings. For example, a trader with 800 shares might enter either 400/400 or 100/200/500 shares. When done correctly, this is a terrific method for managing your trades and risks.

However, managing one’s position in the system can be extremely difficult. Many newcomers who do this risk overtrading and losing money due to slippage, fees, and averaging down the losing stocks. It is quite unlikely that you will scale into a trade.

Even so, there are situations when you can do this, particularly in high-volume deals.

However, you should be aware that scaling into a trade increases your risk, and beginners may misuse it to average down their losing positions. We explained it for information’s sake, and it is not suggested for novices.

Even if they appear to be the same, there is a significant difference between averaging down a losing position and scaling into a trade.

Averaging down a losing position might wipe out a newbie’s account, particularly with tiny accounts that aren’t strong enough to support averaging down.

ABCD Sequence

The ABCD Pattern is the easiest pattern to trade and is great for beginning-day traders. Even though this is very basic and has been used by day traders for a long time, it still works quite well because many day traders use it.

Because this pattern has a self-fulfilling prophecy effect, you simply follow the trend.

The accompanying chart is an example of an ABCD pattern in the stock market. This one starts with a powerful upward movement.

Buyers are swiftly purchasing equities, as illustrated by point A, and setting new highs, as represented by point B. You may opt to join the trade in this trend, but you must not get unduly fascinated with the trade, since it may be very protracted and at its peak price at point B.

Furthermore, the pattern’s endpoint is unknown. Keep in mind that you should never initiate a trade without first determining your stop loss. At point B, traders who acquired the stock earlier begin gradually selling it for a profit, and prices fall.

You should not, however, initiate the trade since you do not know where the bottom of this trend will be. However, if the price does not fall from a specific level, such as point C, it indicates that the stock has found possible support.

As a result, you can plan your trade and set up stops and profit targets.

For example, in 2016, OPTT (Ocean Power Technologies Inc) announced the completion of a new $50 million agreement. This is an excellent illustration of a basic catalyst. At roughly 9 a.m., OPTT stocks jumped from $7.70 (Point A) to $9.40 (Point B). Day traders who were unaware of the news waited for point B, followed by an indicator that the stock would not go below a certain price (C).

If you see that C is holding support and buyers are struggling to keep the stock price from falling below C, you will know that the price will rise. Buyers flocked in droves.

Remember that the ABCD Pattern is a fundamental day trading approach that many retail traders seek. The volume quickly increased towards point D, indicating that the traders had entered the deal. When the stock hit a new low, it was a clear signal to sell.

The ABCD technique may be implemented in the following ways:

1. When you notice a stock storming up from point A and ready to set a new high for the day (point B), wait to see whether the price breaks through support higher than point A. Mark this as point C, but don’t go too further into it.

2. Keep an eye on the stock throughout its consolidation period, then decide on your share size and set your stop and exit points.

3. If you find that the price is maintaining support at point C, you may enter a trade closer to point C to expect a rise to point D or even higher.

4. Your next destination may be C. You may sell when the price falls below C. To minimize the loss, it is critical to purchase the stock closer to C. (Because some day traders have a larger tolerance, they wait a little longer around D to guarantee that the ABCD pattern is complete. This, however, is dangerous since it might diminish your earnings).

5. If the price rises, you may sell half of your shares around point D and raise your stop to your breakeven point.

6. Sell the remaining shares as soon as you reach your objective or sense that the price is losing momentum or that the sellers are gaining control of the price movement.

The Bull Flag Momentum

Because the flags in the pattern don’t usually last long, stock analysts consider the Bull Flag Momentum to be a scalping strategy. Furthermore, day traders should scalp the trade in order to enter quickly, profit, and exit the market.

A Bull Flag pattern with one significant consolidation is seen below.

This chart is known as a Bull Flag because it resembles a flag on a pole. In this pattern, distinct huge candles rise (pole) while a succession of little candles moves sideways (flag) or consolidating in day trading language.

When the pattern consolidates, it means that traders who bought the stocks at a lower price are now selling. While this is occurring, the price does not fall considerably since buyers are still engaging in the transactions and sellers do not yet have price control. Many retail traders will pass up the opportunity to purchase the stock before the Bull Flag starts. Purchasing stocks at a rising price might be dangerous. Chasing the stock is what it is.

Successful day traders often attempt to trade during peaceful times and grab gains during crazy moments.

Chapter 1: Become Familiar with The Market

The first thing to consider when getting started in day trading is the market you want to invest in. That may seem like an odd question to ask at this point, but depending on the amount of capital you have, selecting the right market is critical. The main thing to understand about day trading is that it often results in a streak of losses. And we’re not talking about inexperienced traders here; expert day traders will lose money regularly. Of course, you intend to generate money over time, but just as flipping a coin might result in 5 tails in a row, making numerous day trades can result in many losses before a huge victory. So, if you’re trading a significant portion of your capital, a string of losses could quickly bankrupt you. A single deal might involve tens of thousands of dollars. For these reasons, there are certain regulations and advice in place to assist you from getting into really serious difficulty, but the restrictions may make day trading seem less enticing, particularly if you lack the necessary funds.

Things to Think About Before You Begin

Day trading is neither a pastime nor a game. It’s a serious company, and trading, like any real business, will need a substantial commitment even before you begin.

Day trading requires a significant time investment. You’ll need to research financial markets, stay up with financial news, and spend hours at your computer poring over financial data. Do you have the time to do all of these tasks? It is essentially a full-time job. You cannot expect to be a successful day trader while having a 9-5 job. Successful day traders are completely devoted.

Are you willing to practice before you start day trading? Investing tens of thousands of dollars without prior experience is a foolish decision. We have provided links to practice software that will allow you to mimic stock market trading.

Are you ready to spend many months developing your abilities via practice before day trading with real money? Many brokers even allow you to open demo accounts. Consider working on this and practicing now, then moving on to real-world investment after you’ve perfected your abilities.

Do you have enough money to get started? The US government requires a minimum amount of $25,000 to begin day trading. Do you already have the funds? Is this money that you can lose without going into significant financial trouble?

Select A Broker

If you currently invest in stocks on your own (rather than via your company or a mutual fund), you may already have a broker who can also operate as a broker for day trading. Retail investors may utilize top brokers such as Ally Bank, TD Ameritrade, Trade Station, Interactive Brokers, ETrade, Charles Schwab, and many more.

Trading On the Stock Exchange

Of course, you may purchase as few or as many shares of stock as you like, but experts recommend that you have at least $25,000 in funds that you are willing to risk day trading with in order to trade on the stock market. A day trader is someone who makes four deals in a week. If you want to day trade four days per week, it is suggested that you keep $30,000 on hand as a buffer over the minimum. This number, however, is based on the premise that you will be exchanging genuine shares of stock. It is suggested that you restrict your maximum trading risk to 1% of your whole money.

It is critical to understand your risk and position risk. The number of shares multiplied by the risk equals position risk. If you purchase a stock at $20 with a $19 stop-loss, your risk is $1. If you purchase 500 shares, your position risk is 500 x ($20-$19) = $500.

ones with more volatility will need a higher level of risk than ones with lower volatility. A stock day trader may get leverage, often at a rate of 4:1, enabling them to purchase more shares of stock than they could buy with their own funds.

Trading options is a great method to get started in day trading on the stock market. Purchasing an option contract simply necessitates an investment in