Tag Archives: day trading

What is day trading strategies?

Day trading is one of the approaches to trading that concerns buying and selling stocks within one day. Obviously, the aim of day traders is getting tiny profits on spinning the large amounts of shares (and capital). This strategy may be applied to the highly liquid indexes and stocks. In the majority of cases, the beginner traders fail to deal with day trading successfully. The main reason for this is a lack of the strategy, tested in practice.

Usually, the day traders look for a couple of metrics: volatility and liquidity. The first one measures the range in which a trader can operate. The last one allows buying and selling the stock for a good price, getting profits.

There are several common strategies, used by day traders. Here are the short explanations for some of them.

Scalping

The most popular strategy, which is simple enough to be used by anyone. It involves selling the stocks just after they become profitable.

Fading

A much more rewarding strategy that involves shorting stocks right after they moved upward rapidly. The strategy is more complicated than the previously described one.

Daily pivots

According to this strategy, a trader buys stocks when they have the lowest price and sells when the price is the highest.

Momentum

Day traders, who follow this strategy, monitor news and events, occurring during a day. They ‘catch a moment’ when trends affect the stock price and sell it or buy when it’s needed. Momentum traders risk a lot, defining the trends of the day; but they can also benefit a lot from some of their successful predictions.