From support and resistance trading to scalping strategies, day traders are constantly looking for the best day trading techniques.
The term day trading refers to the practice of looking for intra-day price fluctuations and then trying to capitalize off them, whether the price is going up or down.
Day traders seek to make profits from the price movements within a 24-hour day period.
Online communities like theforexprogrammer.com publish trading strategies and tips for technical analysts who are interested in day trading.
Below are my best day trading techniques recommended for high-risk high-reward traders.
I will be recommending 5 of my best profit mop-up strategies useful for gaining at least 50 pips a day on the market.
Best day trading techniques- 50 pips a day trading strategy
Here are the best day trading techniques I recommend for a beginner to traders:
2. Trend trading
3. Support and resistance trading
4. Momentum trading
5. Pullback trading
Simply put, scalping is a day trading technique used by forex traders that involve the buying and selling of currency pairs with only a brief holding period.
This is in an attempt to make a series of quick profits.
During the training day, regardless of the trading session, there are always price fluctuations.
These fluctuations in the price action present themselves as a series of opportunities where potential small profits reside.
The idea is to buy high and sell low or vice versa depending on the market structure or trend.
The philosophy of scalping is the theory of small compounding pounding profits.
The idea is securing little pips of profit that would eventually compound to a sizable amount at the end of the trading day.
The scalping strategy is better suited for confident traders who can make quick decisions and act without dwelling.
As the name implies, trend trading with the practice that attempts to capture gains by analyzing the direction of the market and making trades off that.
Trend trading is considered one of the easiest day trading techniques because of how much easy the analysis is to do.
Trends generally present themselves several times during the trading day.
Most times, on larger time frames the overall price movement is usually in a trend.
The only difficulty would be to spot these trends on lower timeframes.
Nevertheless, identifying trends isn’t rocket science.
Most times they are cast in stone.
Trends present themselves in two fashions. An uptrend and a downtrend.
An uptrend occurs when the price action is making higher highs and higher lows.
It represents consecutive buy orders by several traders at the same time.
Meanwhile in a downtrend is the Direct opposite of an uptrend.
Statistically, a downtrend is represented by lower lows and lower highs.
In an actual sense, a downtrend is caused by consecutive sell orders by different Traders at the same time.
So, therefore, the easiest way to gain profit on those trends would be to enter a long or short position depending on the trend being formulated.
Support and resistance trading
When taking into consideration some of the best day trading techniques, it is almost impossible not to mention support and resistance.
At a glance, support and resistance a price level that serves as barriers.
These price levels serve as the zenith and base level respectively of a particular currency pair.
Technical analysis of the use of support and resistance trading by identifying price levels on the chart that could lead to a trend reversal or continuation of an existing trend.
In the image above, the price action cut the resistance several times and bounced off it.
This action is a test of the resistance level.
Once this happens, the price action usually bounces in the opposite direction.
Unless in special situations where the is a trend breakout.
This sort of action usually presents itself several times during the trading day.
The onus would therefore be on the trader to spot these actions and capitalize off them.
A momentum trend trading strategy is not only the smartest but the best day trading technique for day traders.
Momentum trading is simply trading in the direction the price action is leaning heavily towards.
Momentum trading is similar to trend trading in the sense that they both have the same fundamentals.
Always follow the trend.
It is so much easier to trade with the trend than against the trend.
Indicators like the RSI indicator and the MACD indicator are perfect for identifying potential trends and trend reversals.
Both indicators are equipped with parameters that help confirm a trend or a trend reversal.
For the best indicator to use for momentum trading, check out my article on the best MetaTrader indicators.
Pullback trading might seem a bit harder to quickly get into and get out because of how short the timing is to make entry and exit trade decisions.
A pullback by definition is a temporary move against the underlying trend.
A pullback represents areas where a small portion of buyers sold.
The result would be visualized by a short and temporary trend reversal.
The best way to trade pullbacks would be to use certain indicators that would test the end of a pullback.
Indicators like the Fibonacci retracement indicator are perfect for measuring the degree at which a pullback deepens before continuing on the underlying trend.
Another good tool for measuring the depth of a pullback is the help of support and resistance lines.
Most times when a trend breaks support or resistance lines, the pullback usually retests the support or resistance line before continuing on to the trend.
Sighting an example using an uptrend.
In a situation where the market breaks the resistance levels, the most likely pullback would be to the previous resistance level.
Keep in mind that this level would now serve as the new support.
Conclusion- Best day trading techniques
Day trading techniques are best suited for investors who are looking for quick gains.
Day traders play an important role in keeping the market liquid.
Though day trading is popular among new traders.
It is an important step to take for traders who are willing to start a long-term career in trading.