There are many different day trading strategies that momentum traders use. Techniques include the gap and go, red to green moves, ride the 9, dip buy reversals, and short. Each strategy has its benefit, which doesn’t mean you must be good at each trading style. Each trader has their trading preference. The gap-and-go strategy is probably the most popular day trading strategy. It entails gapping stocks in the premarket where the price is gapping up above the previous close price.
Table of Contents
Day Trading Strategies for Beginners
- Gap and go
- Red to green moves
- VWAP crossover
- Dip buying bounces off moving average lines
- Shorting reversal patterns
- Buying stocks at momentum breakouts
- Purely trading price action
- Heikin Ashi Trading Strategy
- Ichikmoku cloud trading
- Momentum bull flag strategy
Before we break down day trading strategies, it’s really important to know the brutal truth about becoming a day trader: It’s HARD! Learning how to trade penny stocks will become one of the hardest undertakings of your life.
Ok, so time to scare you so more. The failure rate as a momentum trader is over 90%! That’s right…you’re joining an industry where the odds are stacked against you. This is a good post if you’re looking for day trading secrets. You’re about to join a club where you’ll be trading against the best traders in the world. Don’t let that discourage you.
Now that we’ve gotten the tough love out of the way, let’s talk a little about day trading strategies for beginners.
If you want to become successful, one of the most important things to remember is that proper risk management strategies will be the key to your success. Ideally, you want to have at least a 2:1 profit/loss ratio. Never risk more than you can potentially make!
What Is the Best Strategy for Day Trading?
1. Gap And Go
Undoubtedly, the gap & go is the best strategy for day trading! How it works:
- Hunt for gapping stocks with a minimum of 3% gain pre-market
- Watch for breakouts on daily charts (news is one of the best breakout catalysts)
- Yearly or all-time highs create huge breakouts
- Low floaters create the biggest volatility spikes
- Look for high relative volume
- Watch for multi-day runners after a daily breakout
- Keep an eye on the shorts after 3+ consecutive green days
If you’re looking for successful intraday trading strategies, looking for chart setups with potential daily breakouts is best. They usually happen with daily breakouts.
The gap and go strategy is probably the best trading strategy for intraday. The reason why this strategy is so popular is when a stock moves pre-market, there’s a chance that it might run at the open. Hence the term gap and go. A stock is essentially gaping above the previous day’s close price.
2. Red to Green Moves
Red to green moves are many times great day trading strategies that work. This strategy is when a stock goes up above the previous day’s close price. Many times a stock will have further continuation up when this happens. Again, we use Trade Ideas to find these setups.
3. VWAP Trading
Vwap is another important day trading indicator that many traders pay attention to. It’s right up there with ema’s and sma‘s. Check this $ROKU VWAP trading setup from this year. Pretty solid entries and exits if you follow VWAP and VWAP alone.
4. Ichimoku Trading Strategy
Believe it or not…many traders use the Ichimoku Cloud Trading System for one of their solid day trading strategies. It’s a simple-to-use system with clear entries and exits you can spot.
Foundations Of Successful Trading
1. Order Entry
Limit orders are much safer to use than market orders when stock trading. They protect your entries and exits, whereas market orders are much riskier because you don’t know what your fill will be. Level 1 & level 2 and time and sales show the breakdown of buyers vs. sellers. They have a symbiotic relationship and work in partnership with each other. It’s important always to be aware of how many buyers and sellers are looking to enter and exit a trade potentially.
Lots of manipulation happens with level 2, so always monitoring time and sales is important. Time and sales are buyers and sellers and where they bought or sold. The Level 2 data is real, but it does not mean that there are many buyers or sellers who want to buy or sell. It could be just Algo’s (computers) playing games or traders setting bait.
Learning to draw support and resistance levels on stock charts is critical to your day trading success. Traders are creatures of habit, and finding proper support and resistance levels is essential. Exponential moving averages and simple moving average lines are important indicators that traders pay particular attention to. They tell an important story on all chart time frames.
One of the best day trading secrets we can give you is watching for the 9/20 ema crossover. If the 9 ema points upwards and pushes the price up, you could ride the 9.