Day trading is a very profitable trading style. Thousands of successful traders are being consistent by using professional day trading strategies. It can be undoubtedly a profitable strategy, but yet, it can be dangerous for the newbies. Beginners should stay away from short-term trading styles because it is very stressful. Short-term dealings are those in which investors have to retain their financial assets for a very short period.
Many people think – how can a short-term trade be so risky? If you buy a financial asset, it should be retained for a very short duration, ranging from a few seconds to a few minutes. Think about the situation; the trader needs to make the right decision to avoid any kind of loss. Time starts running out pretty quickly, and the beginners need to make a decision. It creates a stressful environments for novices.
In this article, we will be sharing some amazing techniques so that beginners can start day trading comfortably.
Steps to start day trading:
- In the beginning, you will have to open a trade account.
- Take time to get familiar with the platform. Don’t just jump in to place the orders.
- Analyze the data carefully and place the stop-loss limit. The maximum risk factor should be 1% of your account balance.
- After analyzing the chart, it is time to identify an entry or exit point to place the order. Try to use a robust platform to avoid technical glitches. Get more info here or visit the official website of Saxo.
- Once traders place their orders, they should think about the timeframe. The timeframe has a vital important role in this strategy.
- Use technical indicators to find out the upcoming condition and execute the trade in that way.
What are the best day trading strategies?
Rookie traders often become confused by different kinds of trading strategies. They can figure out which one they should choose. There are many designs that one can easily choose but selecting the best one is pretty hard. Let us mention and describe some of thosestrategies briefly.
A breakout is a great indicator to predict the imminent trend. When a breakout occurs, a newbie has to realize that the price is going to take a new trend very soon. Analyze the chart and you may notice that there are highs and lows in the market. These highs and lows can be used to identify the resistance and support level. A breakout occurs when a new resistance or support level is formed. A breakout is an excellent spot to buy a currency pair because, in most cases, the forthcoming trend is considered to move upward. However, please include the risk management techniques because nothing can be guaranteed in this volatile industry.
Momentum is accepted as a powerful theory among all the technical indicators in Forex. Every short-term Forex trader should have good knowledge about this indicator. It simply indicates the strength of the price movement or the trend. Though we have different kinds of momentum indicators, it is better to use the histogram-based momentum tools as it is very easy to use.
If the price moves downwards, the bars move in a negative direction relative to the reference level. Similarly, if the price moves upward, the bars move above the reference level. Look for the anomaly in the bar formation so that you can easily identify a reversal in the market momentum.
Moving average crossover
This is the simplest of all the available strategies in Forex. This is only an average line of the existing market. To identify the crossover, the beginner has to choose two unique moving averages, preferably 100 and 200-period moving averages. Look for the bullish and bearish cross in the moving average to take trades. Note that, this moving average is going to act as a dynamic support and resistance level. So, if you spot any bullish or bearish price action signal, you can execute trades right at the moving average.