Best day trading strategy 2023 - start trading at nextmarkets

Let’s start with what it is not.  You will often see day trading packaged into the same box with swing trading for some reason.  So we will start by briefly defining each for you just to clear up any misconceptions you might have.

Day Trading

This is a specific style of trading that involves opening and closing trading positions within the same trading session.  There is also a subset of day trading called intraday trading, which includes a further trading style defined as scalping.

Swing Trading

Whilst swing trading does sometimes include taking short-term positions, it is not reliant on them.  Swing traders often have trading positions open for several days, or even weeks.  The strategies that swing traders use are different to a day trading strategy and not interchangeable.

There is no one-size-fits-all strategy for different trading styles out there.  A Forex trading strategy which requires in-depth technical analysis of the financial sector, for example, will be radically different to a swing trading strategy for stocks, where fundamental analysis has an equal importance.

Not only that, always bear in mind that no matter how well a specific strategy works for one day trader it may not reap the same rewards for another equally experienced trader or for you.  It is always best to look at a strategy in terms of how it could be adapted to suit your purposes.

Below are some tried and trusted day trading strategies that you might want to take a closer look at.  Even if none of them fit your particular needs, hopefully they will give you plenty of ideas to start developing your own.

Trend trading is one of the most-used strategies, but is also one that you must embark on with an open mind.  As the name suggests, it revolves around following market trends over a period of time using largely technical analysis, making it a great day trading strategy for beginners to learn and absorb the markets.

There is no room in this strategy for ‘gut feeling’ or having favourite assets, all that matters when you use this strategy is the way your candlesticks are going that is all-important.  Even if it really goes against the grain, you must stick to the rules and follow the trends in the direction they are going.

Within the bounds of a trend strategy, you could do far worse than buy Apple stock when the time is right, it is one of those assets that always seems to be hitting the right notes. There are one or two things you can do routinely to optimise this strategy, both of which boil down to research.  The first is the pre-market trend and to catch that, you will need to be up very early in the morning, at least an hour before opening time.  

The second is being alert to any breaking political, economic or financial announcements as they can blow a trend completely out of the water.  Finding a free stock trading app with built-in alerts can be invaluable for keeping up with the latest news.

Assess each news release individually and in context to the appropriate market.

Start of day is much-favoured, both as a day trading stocks strategy and a day trading Forex strategy.  It works on the premise of the activity that takes place immediately after the markets open for the day, with traders making decisions based on pre-market research and similarities. For example, it is probably not the ideal time to buy Netflix stock when yet another subscription price rise has just been announced.

The main reason for traders adopting this strategy is that it takes considerably less time to maintain than some others, although this is a matter of opinion.  Naturally there are potential pitfalls, because as a day trader it is always ideal to be continuously monitoring your positions throughout the day.  

If you do decide to try it, it is essential to have sufficient knowledge to implement risk management orders, like stop-loss and take-profit and use them to their best advantage.

It is essential to be fully conversant with technical analysis and market sentiment.

Many potentially talented day traders have lost their entire capital by failing to implement a robust risk management strategy into their overall trading plan.  These are just two of the ways for you to avoid becoming another statistic:

Orders

For every trade you enter, there is an optimum time to exit and the penalty for getting it wrong will most likely lead to sustaining a loss, which could be substantial if you are trading on a margin.  

That is why it’s always wise to have a reasonable understanding of the various different types of orders you can use to complement your overall day trading strategy, but there are two that you need to know inside out and use religiously, stop-loss and take profit.

A stop-loss order automatically exits a position, at the level you set, where it is no longer prudent to continue keeping the position open.  It does not preclude a loss, it simply minimises it to an acceptable level.   

Conversely, a take-profit order defines the point you deem appropriate to exit a position with a profit, albeit a small one.  Never change your mind once you have made a decision in an attempt to enhance profits further, it rarely works.

Percentages

Implementing a percentage rule and sticking to it rigidly is another good habit to develop.  The exact percentage you select will be dependent on the extent of your total capital, but 1% – 2% is plenty for the average trader to risk on a single trade.

Should you be lucky enough to have a substantial account balance at your disposal, then the risk per trade should be reduced further, perhaps as low as 0.25% – 0.5% being more than sufficient risk to expose yourself to on a single trade.

What it boils down to is deciding for yourself what type of day trading strategy suits you.  One way or another, you are going to be spending a lot of time delving into the inner workings of your asset of choice, so it’s best not to develop a day trading crypto strategy if you have no faith in that market and your passion is the stock market.

We cannot tell you categorically that the best day trading strategy requires you getting up at 5.00am if you are not a morning person, or telling you to stay up half the night to comply with a specific day trading Forex strategy we happen to think is the best thing since sliced bread. 

It is a very personal thing and one that only you can decide on, depending on the time you have available, what interests you and what you ultimately hope to achieve from day trading.