What Is The Best Day Trading Strategy?

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It's about taking you, one step at a time through a profitable trade, from how to choose your stock, to getting in at the best and safest possible time, to getting out at the best and safest possible time, protecting your capital along the way.

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Find the best broker for your trading or investing needs. See Reviews. Latest Videos. (Refer to Day Trading Strategies For Beginners for a primer on picking the right strategy.).

Even technology that today we take for granted, like high-speed internet connections, can greatly increase trading performance. Using technology to your advantage, and keeping current with available technological advances, can be fun and rewarding in trading.

Protect Your Trading Capital Saving money to fund a trading account can take a long time and much effort. It can be even more difficult or impossible the next time around. It is important to note that protecting your trading capital is not synonymous with not having any losing trades. All traders have losing trades; that is part of business. Protecting capital entails not taking any unnecessary risks and doing everything you can to preserve your trading business. Become a Student of the Markets Think of it as continuing education - traders need to remain focused on learning more each day.

Since many concepts carry prerequisite knowledge, it is important to remember that understanding the markets, and all of their intricacies, is an ongoing, lifelong process. Hard research allows traders to learn the facts, like what the different economic reports mean. Focus and observation allow traders to gain instinct and learn the nuances; this is what helps traders understand how those economic reports affect the market they are trading.

Read about 24 different economic reports in our Economic Indicators Tutorial. World politics, events, economies - even the weather - all have an impact on the markets.

The market environment is dynamic. The more traders understand the past and current markets, the better prepared they will be to face the future. Before a trader begins using real cash, it is imperative that all of the money in the account be truly expendable. If it is not, the trader should keep saving until it is. It should go without saying that the money in a trading account should not be allocated for the kid's college tuition or paying the mortgage.

Traders must never allow themselves to think they are simply "borrowing" money from these other important obligations. One must be prepared to lose all the money allocated to a trading account. Losing money is traumatic enough; it is even more so if it is capital that should have never been risked to begin with. Develop a Trading Methodology Based on Facts Taking the time to develop a sound trading methodology is worth the effort. It may be tempting to believe in the "so easy it's like printing money" trading scams that are prevalent on the internet.

But facts, not emotions or hope, should be the inspiration behind developing a trading plan. Traders who are not in a hurry to learn typically have an easier time sifting through all of the information available on the internet.

Expect that learning how to trade demands at least the same amount of time and factually driven research and study. Another restriction was the trading times. I was only allowed to trade from 7: So what's the best day trading strategy for such a challenge? So which of these strategies would be the best day trading strategy for this trading challenge? The best day trading strategy is always the strategy that fits the current market conditions!

In a trending market, you want to use a trend-following strategy. Since you make more money on your winning trades than you lose on your losing trades, you only need to be right 1 out of 2 trades and would still make money. The problem with these trading strategies is that they don't perform well in sideways markets. If you trade a trend-following strategy in a sideways market, you will get whipsawed - and frustrated. Therefore you must make sure that the market is really trending before using a trend-following strategy.

I don't know if that's true, but it sounds about right. And sometimes there are days when the markets are not trending at all. Here you can see how the stocks trading range is almost triple the recent trading range for this stock. This is the type of strong trading range you want to see breaking out of the 90 day price high.

Remember that no matter how good the initial breakout looks you have to make sure your entry is preceded by a gap no matter what. You can see in this final example how the entry and the exit appear on an intraday chart.

Notice I wait for the gap and then enter a market order immediately after the opening gap. The order typically takes about 3 seconds to execute on a volatile market.

I recommend you watch the market closely prior to the opening so that you are ready to go when and if the gap occurs. The Momentum Breakout is one of the easiest and productive day trading methods for traders looking for momentum set ups.

Remember that the breakout can be either a gap or an extended range bar. Either way, you cannot enter the trade prior to a confirmation gap that occurs at the opening after the breakout outside of the trading range.

This is pure momentum so you want to make sure you give the strategy time to work. For more on this topic, please go to: