From trading on supports and resistances to scalping strategies, day traders are constantly on the lookout for the best day trading techniques.
The term day trading refers to the practice of looking for intraday price fluctuations and trying to capitalise on them, regardless of whether the price is rising or falling.
Day traders try to capitalise on price movements over a 24-hour period.
Online communities such as theforexprogrammer.com publish trading strategies and tips for technical analysts interested in day trading.
Below are my best day trading techniques that I recommend for high risk, high reward traders.
I recommend 5 of my best profit-taking strategies that will help you earn at least 50 pips a day in the market.
Best day trading techniques – 50 pips a day trading strategy
Here are the best day trading techniques I recommend for beginners:
- trend trading
- trading on supports and resistances
- momentum trading
- trading on pullbacks
Simply put, scalping is a day trading technique used by currency traders that involves buying and selling currency pairs with a short holding period.
It is an attempt to make a series of quick profits.
During the training day, there are always price fluctuations, regardless of the trading session.
These price fluctuations present themselves as a series of opportunities where small profits can be made.
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 and hammering profits.
The idea is to secure small profit spikes that add up to a substantial amount at the end of the trading day.
The scalping strategy is best suited to confident traders who are able to make quick decisions and trade without delay.
As the name suggests, trend trading consists of trying to make profits by analysing the direction of the market and trading on that basis.
Trend trading is considered one of the simplest day trading techniques because it is easy to analyse.
Trends usually occur several times during the course of a trading day.
On larger time frames, the general price movement is usually in a trend.
The only difficulty lies in recognising these trends on smaller time scales.
However, recognising trends is not rocket science.
In most cases, these are established trends.
Trends manifest themselves in two ways. An upward trend and a downward trend.
A bullish trend occurs when the price trend shows higher highs and higher lows.
These are successive buy orders by several traders at the same time.
A downtrend, on the other hand, is the exact opposite of an uptrend.
Statistically, a downtrend is characterised by lower lows and higher highs.
In a real sense, a downtrend is caused by consecutive sell orders from several traders at the same time.
The easiest way to profit on these trends is therefore to take a long or short position, depending on the trend that is forming.
Trading on supports and resistances
When considering some of the best day trading techniques, it is almost impossible not to mention support and resistance.
At first glance, support and resistance are price levels that act as barriers.
These price levels act as the zenith or base of a particular currency pair.
When technically analysing support and resistance trading, one identifies price levels on the chart that could lead to a reversal or continuation of an existing trend.
In the chart above, price has broken through and bounced off resistance several times.
This action represents a test of the resistance level.
Once this happens, price usually rebounds in the opposite direction.
Unless it is a special situation where a trend breakout occurs.
This type of action usually occurs several times during the course of a trading day.
It is therefore the trader’s responsibility to recognise these actions and capitalise on them.
The momentum trend trading strategy is not only the smartest, but also the best day trading technique for day traders.
Momentum trading is simply trading in the direction in which the price trend is strongly inclined.
Momentum trading is similar to trend trading in the sense that both have the same basic principles.
Always follow the trend.
It is much easier to trade with the trend than against it.
Indicators such as the RSI indicator and the MACD indicator are excellent for recognising potential trends and trend reversals.
Both indicators have parameters that help confirm a trend or reversal.
To find out which indicator is best suited for momentum trading, see my article on the best MetaTrader indicators.
Pullback trading seems to be a bit more difficult, as the time period for entry and exit is very short.
By definition, a pullback is a temporary movement against the underlying trend.
A pullback represents areas where a small proportion of buyers have sold.
The result is illustrated by a short, temporary trend reversal.
The best way to trade pullbacks is to use certain indicators that show the end of a pullback.
Indicators such as the Fibonacci retracement indicator are excellent for measuring the extent to which a pullback deepens before continuing the underlying trend.
Another good tool for measuring the depth of a pullback is the help of support and resistance lines.
When a trend breaks support or resistance lines, the pullback usually retraces the support or resistance line before continuing the trend.
Let’s look at an example using a bullish trend.
In a situation where the market breaks resistance lines, the pullback will probably be towards the previous resistance level.
Remember that this level now acts as new support.
Conclusion – The best day trading techniques
Day trading techniques are best suited for investors looking for quick profits.
Day traders play an important role in keeping the market liquid.
Although day trading is very popular among new traders.
It is an important step for traders who are ready to start a long-term trading career.