The Best Day Trading Strategy for Beginners for Multiple Profits
This requires speed and the ability to identify entry opportunities in minutes, or even seconds.
Even though it is quite difficult, many people choose day trading because they can open many positions in one day, small losses, and the possibility of multiple profits.
Just like all types of strategies, day trading still carries risks, even greater than other trading strategies. Not to mention when it involves leverage and margin requirements.
Studies say, in 2 years, only 20 percent of traders who survive day trading. Scary, isn't it?
Eits, do not rush to worry first. Day trading risks can be minimized using the following best day trading strategies.
Important Keys in Day Trading
For both novice and professional traders, in order to be successful as a day trader and be profitable in the forex market, there are several concepts that need to be understood:
1. Volatility
Volatility is the price fluctuation that is needed when measuring the risk of a currency pair. In many cases, the higher the volatility, the higher the risk of the pair.
However, high volatility is usually targeted by day traders because it indicates more trading opportunities and profits.
2. Liquidity
Liquidity is an important component because it determines how quickly an order can be executed at the desired price. Typically, high liquidity is characterized by high trading volume and tight bid-ask spreads.
When trading activity seems crowded, it means that there is supply and demand for the pair in question so that you can easily complete transactions. For example, if you sell a pair in a high-liquidity market, you will automatically find people who want to buy the pair very quickly.
While in a market with low liquidity, a single transaction can take a long time to complete due to a lack of buyers and sellers.
3. Trading Volume
This indicator shows the number of times a pair has been bought and sold in a certain period of time. High trading volume indicates that there is great interest in the pair.
Best Day Trading Strategy For Beginners
If you're just starting out on your trading journey, here are some of the best day trading strategies that can help:
1. Breakout Strategy
When the price of a currency pair moves above the Resistance line or below the Support line, this condition is called a breakout. After the breakout occurs, usually volatility will increase, so that price movements are expected to continue.
If high volume appears to break the resistance, then the uptrend will occur for a long time. However, if the price actually returns to the range of the previous position, then it indicates a false breakout.
To be more sure, you can use a triangle chart pattern or wedge to confirm a price breakout.
2. Scalping Strategy
Scalping is one of the best day trading strategies because it is easy to master. Scalping is done by opening a position on a low time frame (1 minute – 15 minutes) and aiming for a small profit.
Sometimes, you may achieve half or even a quarter of the total possible profit, but the risk remains relatively low. Due to the low rate of profit in scalping, traders tend to look for more liquid markets, such as forex, to execute this strategy and maintain a high trading frequency.
In scalping, having an exit strategy is also important, as one big loss can wipe out many small, hard-earned gains throughout the day. Not only that, you also need strong stamina because you have to keep monitoring the market for hours.
As for the conclusion, mastering day trading does take time. Therefore, you should look for the right day trading strategy and diligently practice applying it.
For beginners, you can take advantage of a demo account before trying a day trading strategy on a real account.
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