What is the Best Day Trading Strategy?
The market seems out of order, and prices swing up and down daily. Recent weeks have made securities look volatile after long periods of all-time highs and fast-paced growth. While long-term investors get anxious, some of the best day traders are looking to profit on recent developments, which is why, in this article, we’ll cover the best day trading strategies to help you succeed in the stock market.
First things first
Below, we list multiple advanced day trading strategies you can capitalize on to turn a profit in this market. Perfect strategies are a relative understanding, as traders have unique personalities and dedication to trading. Therefore, a good strategy for one might not be a good strategy for another individual.
Our pick of advanced trading strategies
The Ichimoku Cloud Trading Strategy.
Ichimoku Kinko is a free indicator and, despite its simplicity, translates to fully equipping a trader’s strategy. Senkou Span A and Senkou span B formed the so-called Kumo cloud. Price action is bullish if the market is trading above the Kumo cloud. Conversely, prospects look bearish when the price is below the Kumo cloud.
The dynamics of this metric are based on support and resistance levels, indicating price trends similar to analyzing moving averages of the stock price to assess price action.
Order block is market behavior showing order data of critical financial institutions. Central banks are large institutions that drive the price of the market. For example, the US Federal Reserve interest hikes significantly impact the market. When order books rank up, markets build order blocks, automatically moving into a range where most investing decisions happen. This strategy is purely based on growth/decline data based on institutional traders’ sales or purchases of securities.
While also referred to as a primary trading strategy, scalping remains highly effective as small profits are realized on many trades by determining price action and analyzing statistical trends with technical analysis. Traders that implement scalping maintain a favorable ratio of winning trades relative to losing trades to ensure profits. Scalping can be highly lucrative for experienced day traders willing to use leverage as higher quantities can amplify realized gains, but it is not without risk. Traders with scalping as their primary strategy often bring in over 100 trades per day.
This controversial strategy is often debated and is considered dangerous for beginners. All over the globe, traders implement reverse trading, i.e., trend trading. Trend pullback and a mean reversion strategy are vital in making this strategy work.
Reverse trading identifies possible pullback, because predominant factors like market sentiment bring insecurity. Therefore, this strategy is complicated due to its emotional heaviness, as traders must bet against an upwards trend, shorting the market. Loss aversion is the tendency to prefer avoiding losses over realizing capital gains. To make ‘trading the trend’ work, traders must effectively predict pullbacks, as well as the strength and length.