Day Trading : Successful Strategies

by Manny Backus, Day Trading Strategy Expert

There are many different strategies that may be employed in day trading.  Most involve concentration on various "groups" of stocks. That is, financials, oils, technology, and currencies.  For example: one might look at high priced, fast moving stocks which capture a large move on a small amount of shares.  Conversely, others may watch for low priced, slow moving stocks which capture a small profit on a large amount of shares.

Here are additional strategies which may also prove to be successful in day trading.  Industry experts advise that you limit the risk in day trading by focusing on that which you can afford as well as live comfortably with the results of your decisions.  Ensure you have the financial wherewithal to make multiple transactions per day.  When you see the slightest movement, make the sell or buy.  Waiting for a particular stock to rise can be costly.

Know your stocks before you begin trading.  Read the financials on a particular group of stocks, listen to the day’s events, watch the market in general, and use any and all software to help you determine the viability of a particular stock or group of stocks.

If you are dealing in currency, that is Forex trading, decide on either a mechanical system of trading or whether or not you prefer to make each trade based on your own knowledge and expertise of the stock.  Analysts in Forex trading note that trading one currency offers a profit margin that is higher that most stocks.

The utilization of software is critical in understanding the market trends as they relate to the stock of choice.  In addition, chart analysis and up-to-date information is vital in making a trade that affects your bottom line.  Therefore, whether you use a broker’s software system, or choose your own easy to use systems, they should be available and running the moment you begin your day trading.  Moreover, the systems you use should make sense and not have you spending time figuring them out while you could be online trading. 

Develop confidence as a day trader.  Do not put yourself or your family in jeopardy by trading wildly or with no basis of understanding.  Become immersed in the market as well as the stocks you choose.  Knowledge is power, but greed can wipe out all that you have saved for the future.
Another important point should be made.  According to tradethemarkets.com, “If you have a $50,000 online trading account, do your utmost to ensure the stock does not turn into loss of more than $1,000.  This means if you max out your 2 to 1 margin account and buy 2000 shares of a $50 stock, you must have a stop loss of 50 cents.  Instead it is preferable to buy 400 shares of this $50 stock and use a $2.00 stop to start. This leaves an $800 dollar loss, and gives you room to trail your stop up to break-even.  Setting up for losses of 1% of your equity is a good day trading strategy.”
Day trading strategies encompass a variety of components most of which depend upon how you view yourself as an individual.  Can you accept losses?  Can you stick within your financial budget?  These questions and more should be answered before you begin day trading. 

 
According to the Securities and Exchange Commission, “day traders must watch the market continuously during the day at their computer terminals.  It's extremely difficult and demands great concentration to watch dozens of ticker quotes and price fluctuations to spot market trends.  Any day trader should know up front how much they need to make to cover expenses and break even.”
In addition, have you chosen a good and accredited broker for day trading?  Are you satisfied with the commission structure, amount to be invested, their track record, tools and resources, interest rate, and any additional fees which may be required?  Is your broker readily available to you at a moment’s notice? Whether your day trading is carried out in your home or office, do you have the most up-to-date technology that will yield positive results?

While there are a multitude of day trading strategies online, they aren’t worth anything unless and until you are ready to undergo an emotional roller coaster of ups and downs that are associated with the market utilizing day trading.  If you have the strength and ability to cope with either outcome, you are ready to pursue day trading and all of the strategies that will make you successful.

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