Day Trading Strategies To Get Familiar With

Range traders typically tend to trade within a set price range, the traders main goal is to buy when the market price is towards the lower price range, and then sell once the market price reaches the higher end of the price range.

Range trading can be quite risky business, and it requires very precise timing and buying or selling at the wrong time could result in significant losses. There are many factors that can break the price range like sudden news or market events which can cause the price to move in unfavourable directions.

Successful day traders have to pay very close attention to the news in order to profit during major events. These big market events could be things like the announcement of the latest jobs report or a change in interest rates from the Federal Reserve.

A Day traders’ main goal is to attempt to predict the direction that numerous asset prices will move in response to these types of major events.

This is a strategy that also works when traders follow the news of individual companies stocks – trading a public company right before or ight after the quarterly earnings report is released is increasingly popular among these kinds of traders.

There are 2 important levels in trading, support and resistance.

A breakout occurs when price breaks above resistance, or below support. If price breaks above resistance a trader might look to take a long position. Should price break below support, a trader would consider this as a potential selling opportunity.

A breakout of either of these levels suggests that a trend could be forming, either up or down. If price breaks resistance, it may trend up, if support is broken there may be a downtrend.

Breakouts can often be accompanied by higher volume this is considered to be a momentum trade. This happens when a great number of market participants identify the breakout and seek to profit from it.

Not all breakouts continue on to form a resulting trend. There is a term for trades that breakout but fail reasonably quickly, which is a ‘fakeout’. This can sometimes result in a complete reversal of direction in price.

In short, scalping is just a quicker version of range trading. The difference is that with scalping trading, day traders could buy and sell dozens of times a day for just one investment in the hopes they earn a profit for each small movement.

Scalping is a strategy that is most common among experienced traders who have comprehensive risk management strategies and a keen eye to identify short-term price patterns to try to avoid significant losses.

All investments – including stocks – are subject to generalised price trends. If something loses money one day, chances are good as investors cash out, it will continue to lose money. But stocks that have been going up in price may continue to go up as traders jump on that same bandwagon.

Momentum traders try to use these price trends to their advantage. In layman’s terms, these types of traders work on the basis that past price trends will indicate future trends.

Fading is when a trader buys into assets that have been heavily sold, or they sell assets that have significantly gone up in value. A day trader that is implementing a fading strategy predicts that the herd mentality of jumping on bandwagons pushes prices too far.

The goal of the fading strategy is to profit when markets overreact to news or significant events. BUT fading is a high-risk strategy since it has a tendency to go against trends and can result in significant losses for the trader.

Leverage trading is a super common strategy for many day traders and it essentially means trading with borrowed money, using margins. This type of trading has the opportunity for traders to make quite high gains, but you can lose money much more quickly if your trades don’t go well making it a high-risk strategy.

We know that the jargon around day trading can be a task to wrap your head around, but at the International Day Trading Academy you can rely on us to help you succeed on your journey into day trading. 

Our coaching and mentor programs can help you to close the gap between your potential earnings and your current earnings when choosing a day trading strategy to undertake. 

To find out more about how we can help you on your day trading journey, you can contact us to find out more!