Day Trading Techniques. Day trading can become foolishly like gambling if you do not follow these basic day trading strategies and day trading tips.
Day Trading Strategies 1: Cut your losses short
This is the No 1 rule to success in day trading. Most people do just the reverse and wonder why they are losing so much from their trading. They let their losses run while cutting their winners short.
Unfortunately, this cardinal rule is easier said than done. Learning to cut your losses short requires significant discipline. You should determine exactly how much of a loss would indicate an exit point for you right when you make a trade, and stick to that always.
Day Trading Strategies 2: Always use stops
Some people may feel that a stop is not a good thing as it would put you out of a position just before a move that could net you huge profits. However, stops also protect you from huge losses, as they would put you out of a position just before the market plunges. Place your stops intelligently, perhaps just below a fixed spread from your starting price; make the decision right when you place your trade so you do not get overrun by market emotions
Day Trading Strategies 3: Select the right markets
Day traders can only make money in liquid markets; they thrive on volatility. There must be large enough daily or short-term movements to make trading worthwhile. Markets that remain thin are very dangerous and can be very risky if you do not have the time to watch your trades all the time.
Important day trading tips: Avoid markets where trades tend to occur erratically, with periods of low activity followed by sudden gaps in prices. These gaps are very difficult to predict and can spell a huge loss for you as a trader.
Day Trading Strategies 4: Set trailing profit targets
When day trading, letting your winners run indefinitely might not always be a good idea, since you are unable to predict market movements fully.
Day Trading Techniques: The best way for you to do this is to set trailing profit targets depending on the chart patterns. If the bullish pattern you had been expecting continues, allow your winners to run – set progressively higher profit targets; but if you notice a reversal, get ready to get out.
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