Best day trading strategies for investors
The best day trading strategies change every year. New forms of analysis, pattern identification and more can influence investors. And as you may know, day traders are a whole different breed. According to a Modern Trader report, there are over 13 million day traders around the world.
4 most popular day trading strategies
Day traders understand that there are many ways to achieve and maintain winning positions throughout the day. From trailing stops to profit targets, you can predetermine when you exit.
But no two-day trader thinks exactly the same. In fact, most of these investors have their own set of original guidelines, concepts, and even superstitions. Whatever works to move forward, they will use it. And they will keep using it until their luck runs out.
Still, there are four popular day trading strategies that are most common in the stock market today:
- Daily pivot
- Movement trading
Each of these strategies uses different techniques. But deciding when to sell is a uniform concept. Day trading is a full-time job, and most traders will define exactly when to sell before buying a stock in the first place. Let’s take a closer look at these four day trading strategies below.
Stock volatility is the name of the game when it comes to daily pivot trading. And the goal is to buy a stock every day at its lowest price and sell it at its highest price.
These are known as âpivot pointsâ which investors use as indicators. Specifically, they use the ups and downs of stock prices and the previous day’s closing prices to calculate pivot points for the current day. It has become one of the most common day trading strategies for determining market trends over different periods of time.
The fading involves selling stocks short. And short selling is a trading concept where you speculate on the fall in the price of a stock.
You start by borrowing stocks that you think will lose value. Then you sell those borrowed stocks to buyers who are willing to pay the market price. Theoretically, you bet that the stock price will continue to fall before the borrowed stock is returned.
You bet and profit from the fall in the share price. However, this is a much more advanced form of trading and is not recommended for beginners in day trading.
Did you know that newsletters and financial updates can play a role in the growth or decline of a stock? Well, motion traders certainly do.
The movement’s strategy revolves around the recognition of trends and the dissemination of press releases. Day traders buy stocks that have high volume support and overcome them until there are signs of a trend reversal. At this point, they sell their stock, hopefully for a profit. It’s that simple.
Scalping is one of the most popular day trading strategies you can find. This is because it eliminates as much risk as possible in a high risk market. Day traders take as much risk as anyone else. But scalping helps reduce this risk by trading stocks as soon as positions become profitable.
Scalpers are not prepared to take risks and expect bigger returns. As soon as a stock price becomes advantageous, the trader will sell for a small profit. By doing this several times during the day, these traders can accumulate considerable gains.
However, scalping also requires you to sell a stock as soon as it starts to go down as well. This way you take a small loss and move on before the stock falls further.
Best day trading strategies for you
As you now know, there are different ways to do day trading. Yet it is much more than a hobby. Your dedication will have to go well beyond your negotiating time. It takes a lot of research and continuous monitoring to become a day trader.
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Read more: Day Trading on Robinhood – The Cans and Cannots
About Corey Mann
Corey Mann is the Content Manager for Investment U. He has over 10 years of experience as a journalist and content creator. Since 2012, Corey’s work has been featured in major publications such as The Virginian-Pilot, The Washington Post, CNN, MSNBC and more. When Corey isn’t focusing on Investment U, he enjoys traveling with his wife, going to Yankees games, and spending time with his family.