Once you’ve learned the jargon for day trading strategies and figured out your trading personality, you can start to pick up steam. The best day trading strategies allow you to get the most profit possible from every play you make, whether you have one iron in the fire or 10.
Of course, I always recommend starting slowly, but you don’t want to risk losing momentum. Many day traders get frustrated after a day or two and quit. Remember, trading is a skill you develop over time, and there are resources like The 10-Minute Millionaire Pro available to help you navigate the stock market.
For now, though, let’s look at some of the best day trading strategies if you’re hoping to maximize your profits.
1. Understand How Options Trading Differs From Buying and Selling
Options trading is different from buying stocks. When you trade options, you don’t actually buy or share stocks. Instead, you buy the option to purchase or sell a certain batch of stock by a certain date in the future.
It’s kind of like renting an apartment in a competitive market. You see one you really like, but there are still a few more on your list. To secure the apartment in case you want to lease it, you give the landlord a deposit.
Should you decide to exercise your option by the date you agree, you sign the lease. If you don’t, the landlord keeps your deposit in exchange for taking the apartment off the market for a specific period of time.
Options trading isn’t always best for beginners. However, if you subscribe to the 10-Minute Millionaire Pro, you can learn how to trade options successfully for even more profit than you might have earned through traditional buying and selling. It might even become one of your go-to day trading strategies.
2. Don’t Trade Unless You See a Good Play
People often think that day trading means trading every day. That’s hardly ever the case.
If you don’t see a good play, don’t make one. It’s that simple. One of the fastest ways to reduce your profit through day trading strategies is to buy or short stock just because. You’re bored, you think you need to see some action, or you’re making decisions based on emotion.
3. Learn to Recognize Key Stock Chart Patterns
Stock chart patterns are widely misunderstood. When it comes to day trading strategies, you have to make quick decisions. Looking for a specific stock chart pattern can speed up the process of evaluating a particular stock.
There’s a caveat, though. Stock chart patterns don’t appear in a vacuum. You can’t look at a pattern, recognize it, and know where the stock price is heading. Instead, you have to consider it in context.
For instance, maybe you see a bull flag. You go back a couple days and see the same bull flag. The stock price waffles back and forth between support and resistance, then shoots up. If the pattern occurs consistently enough, and in relation to a particular catalyst, you can feel comfortable buying the stock for the next breakout.
4. Decide How Much Money You’ll Risk Per Trade
Many traders find it difficult to quantify risk tolerance. I’ll share with you the easiest method.
Decide how much of your trading account you’re willing to risk on a single trade. That will tell you your risk tolerance.
I often advise new day traders to risk no more than 2 percent of their trading account balances on single plays. That’s a very conservative way to approach day trading strategies, and it protects your wealth from sudden, unexpected losses.
People with higher risk tolerances might risk 10 percent or more of their trading accounts on single plays. I don’t recommend it, but it all depends on your comfort level. Never invest money you’re not willing to lose.
5. Trade at the Beginning or End of Day
The most volatility in the stock market occurs just after the market opens and just before it closes. In the morning, day traders are making moves based on overnight announcements and early-morning activity. In the evening, they’re trying to squeeze in their last trades.
Volatility is a good thing. It means there’s a lot of price movement, so you have plenty of opportunities to maximize your profits.
6. Keep Track of Exchanges in Other Countries
No matter what time it is, there’s a stock exchange open. It might be on the other side of the world, but those stock exchange can influence those domestically.
Let’s say that something happens in China to drastically reduce a stock’s price. When the stock exchange opens in the United States, confidence in that stock plummets. Traders start dumping the stock left and right.
It happens all the time. If you’re open to all day trading strategies, don’t ignore what’s going on in other parts of the world.
7. Track Overnight and Weekend Activity
Similarly, you’ll want to know what happens overnight in the United States. Keeping track of the news can help you identify stocks you might want to buy when the market opens.
Day trading strategies work best when they’re based on hard information or data. If a company has suddenly announced a major influx of venture capital, you can expect its stock to rise assuming there’s no negative news or fundamentals to suggest otherwise. Those announcements can occur outside trading hours, so keep your ears open.
8. Cut Your Losses Early
If you start to lose money on a play, don’t wait because you assume it will eventually rally. Instead, cut your losses and move on to the next thing.
Too many day traders watch a stock sink and think of their trading account balance dwindling. They hold on to hope, only to see the stock price dip even further. You’re better off dumping the stock early, learning from your mistake, and moving on to other day trading strategies.
9. Use Limit Orders Judiciously
Limit orders are designed to prevent those aforementioned losses. If you use limit orders with every trade, you know that you’ll only lose a finite amount of money.
This article is about day trading strategies and profits, but you know you won’t always pick a winner. Even if you follow my work, you’ll notice that I make wrong calls. The stock market is unpredictable, so you have to prepare for any eventuality. Limit orders help.
10. Maintain and Revise Your Goals
Your day trading strategies should reflect your investment goals. When you first start out, you’ll have a set of goals in mind, but you’ll revise them as you gain more experience. At least, you will if you hope to be successful.
Having unrealistic goals can lead you into traps and cause you to take unnecessary risks.
11. Look for Volume
I don’t like to invest in low-volume stocks. Low volume means there’s not much activity, so you’re likely to see a spike.
When a stock has higher-than-average volume, you stand to profit. You can also look for big swings below support and above resistance. That suggests lots of traders are interested in the stock.
12. Avoid Listening to Promoters
Promoters who spend too much time tooting their own horns are typically profiting in some way for promoting the stock. Ignore them as much as possible.
For instance, when I share stock information and tips with my subscribers, my only goal is to help them profit. I don’t have any affiliation with the companies behind the stocks I recommend, and the only way I earn money is by taking my own advice.
Day trading strategies can help you learn how you operate best. What’s your optimum time to trade? How about your risk tolerance?
The more you trade, the smarter you’ll become. I encourage you to join my Stealth Profits Trader newsletter for even more opportunities. I share with my subscribers the best day trading strategies for bringing in more profit and limiting losses.