Top Stock Day Trading Strategies

We all know that trading strategies are one of the most important parts of trading in the stock market. Choosing the right strategy is probably the most essential decision that a potential trader can make. Without good strategies, trading with the stocks would be like walking in the dark and trying to find our way around. A solid strategy is important to keep things at least a bit more organized and not make it look like we are gambling. Every investor needs to research the best possible stocks that they can trade with in the future in order to generate a big amount of payouts.

One of the crucial trading strategies includes day trading. This is riskier than any other type. This is because, in the day trading, the trades are closed every few minutes or hours. Therefore, there is less information to go about. The main idea behind this strategy is that it is a pullback trading strategy. In the short run, when there is fear in the market performance the prices of the stocks can go below their actual price value. This is the time when a lot of investors make huge profits from the day trading strategy.

In this article, we will further discuss several stock markets day trading strategies such as pivot point strategy, end-of-day trading strategy, and news trading. Besides, we will talk about limit orders such as take profit and stop losses.

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Pivot Point Strategy

The pivot point is a technical analysis indicator that shows what type of market trend is active at a given time. Traders in the stock market will occasionally see days when the market is in a very strong trend where it is not uncommon to see price reach all the way down or all the way up. Even though these types of days are not very usual, the market will still have them from time to time. There are three main ways that traders can use pivot points in their trading.

The first way that we investors can use Pivot Point is to help determine the overall sentiment of the market. When the price is trading above the middle pivot and remaining above it then it is generally said that there is bullish sentiment in the market. So traders should be on the lookout for the buy trades. On the other hand, when the price is trading below the middle pivot and remaining below it then it is considered to be the bearish sentiment in the market. Consequently, the traders should be on the lookout for sell trades.

However, it should be noted that there will be days when there is no clear sentiment in the stock market. On days like these, it would seem that neither buyers or sellers are in control; however, that does not mean that there are no trading opportunities present.

The second way to use Pivot Point in the stock strategies for day traders is as a form of static support and resistance. This is great for traders who have trouble identifying support and resistance on a regular candlestick chart and are looking for clear levels to base their trades off. However, this is where a lot of traders make mistakes. Every time price reaches a resistance level they blindly take a sell trade and every time the price reaches a support level they'll do the same for a buy trade. But this alone is not an effective trading strategy. The main thing the investors should do at this time is to combine pivot points with other forms of market analysis in order to increase the probabilities of trades.

End of Day Strategy

Another important trading strategy that should be mentioned in stock market day trading strategies that work is the end-of-day strategy. This strategy is especially beneficial for people who work full-time and work hard in a day so they do not have time to trade. End-of-day trading usually means trading after 6:30.

If you are using this trading strategy you can look at multiple markets, besides you can reduce your risk and are less likely to take impulsive and irrational trades when it comes to end-of-day trading. What often happens to the day traders is that they often get frustrated while they sit and wait for the right opportunity to appear. Moreover, they sometimes get completely off track and take a massive trade which usually becomes the main reason why they experience a huge loss eventually.

On the other hand, end-of-day traders do not have to be locked on their screens, so there is little chance of taking an irrational decision when it comes to the end-of-day stock trading strategies. Besides, another advantage of this type of trading strategy is that you put your orders and your stops in your trades and you are less likely to change that. The major thing you will do is to check them on the other day. This is a very important thing because that way you are less likely to do any damage to your potential trades.

News Trading

News trading is a technique to trade equities, stocks, currencies and other financial instruments based on economic news reports. These reports usually start a strong move in the market which creates a trading opportunity for a lot of investors. It is not enough to know the technical analysis only, what makes the financial markets move is also another crucial thing that every trader should take into consideration.

News trading is one of the easiest strategies for stock day trading to comprehend. All the investor should do in this case is to wait until the important news release is published and act according to the market performance. There are different types of news that can have a huge effect on the stock market including the meetings held by essential financial institutions, new economic updates, changes in the interest rates, and other monetary policy news.
If the news is positive, consequently, it will have a positive effect on the overall market performance of the stock market which means that the market will continue to go up. On the other hand, if the news is negative, the opposite situation will occur.

The important thing about news trading simple stock day trading strategies is that when the news is being published, usually the stock market starts to become extremely volatile which means that stock prices move very quickly. This is when most of the traders take advantage of this situation and place their trades at this volatile time in order to generate a substantial amount of money.
News trading is considered to be the easiest strategy as the only thing an investor should do is to look at the current news, assess if it will have a positive or negative effect on the specific stock, and start trading accordingly.

Limit Orders

While talking about the best stock day trading strategies it should also be noted that limit orders are another very crucial factor while trading in the stock market. Limit orders include take profit and stop losses. These orders just close the trade when the stock prices reach a specific number.

For example, we have a stock trading at $25 and you put in a limit order for $20 meaning the 20 dollars is the maximum amount that you are willing to pay. The trade won't execute until it goes to or below the price that you specify it. So in this case $20. Now let’s look at what happens when you sell with a limited order. At this point, you set a limit for how low you want to sell it. So the price that you enter on a sell limit order means that you want to sell it at that price or higher.

Let’s take another example. Imagine you bought a stock at $100. You think that it will reach $130, but are not too sure. You also don’t want to lose more than 20% of your investment. So your take-profit level will most likely be $120 just to be safe. And the stop-loss level will be $80. This is useful because. Imagine you just go to sleep while your trade is open. Instead of waking up and seeing you just lost 50% of your investment, the stop-loss automatically closes everything at $80 saving you money.

While talking about the limit orders it is important to mention that with limit orders, your trade is not necessarily guaranteed to fill completely. It is possible to only get part of your order filled if the price moves too quickly and it does not go back to your limit price.

In terms of stop-loss, it represents when you are waiting for a stock to go up to a certain price before you are willing to buy it. There are times when you may not want to buy a stock currently because you are not completely sure which direction it will take. So let’s assume you set a stop loss at 11 dollars which mean that once it hits 11 dollars you will be pretty certain that it is trending in an upwards direction so the stock will be bought at whatever the available price is.

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Best Day Trading Strategies - Key Takeaways

Trading strategies are core parts of how we trade. A good trading strategy is crucial because it keeps things more organized in trades and makes more opportunities to gain a big amount of payouts.

When it comes to the stock market, there are several important trading strategies which include pivot point strategy, end-of-day trading strategy, and news trading.
The pivot point is a technical indicator that tells the traders which market trend is active currently.  Usually, traders use Pivot Point to determine the overall sentiment of the market.

Another noticeable strategy is the end-of-day trading strategy. It generally means trading after 6:30. Investors can experience a lot of benefits from this trading style.
News trading is a way to trade with stocks according to the economic news updates. It is considered to be one of the simplest strategies.

FAQ on Stock Market Day Trading Strategies

What is the easiest day trading strategy?

One of the easiest trading strategies is considered to be News trading. News trading is a Pretty self-explanatory strategy actually. You simply wait for news to come out about a specific company, and depending on what kind of news it is, you place a trade.

The only thing the investor should do here is to wait until the important news will be published and then act according to what direction the stock market will have. Usually, when the news is bad, the market performance goes down, on the other hand, when the news is good, the market goes up and most of the traders place their trades at this given time.

What is the most profitable day trading strategy?

There is no such thing as the most profitable trading strategy because it all depends on the skills and knowledge of the individual traders as well as the market performance at the given time. However, one of the most profitable day trading strategies is considered to be the end-of-day trading strategy.
The biggest advantage of the latter is that there is little chance of taking an irrational decision, besides when a trader puts their orders in their trades, they are less likely to change that. All this means that there is less risk of losing money and more probability that traders will manage to generate a big amount of profit.

How do you create a day trading strategy?

There are lots of trading strategies in the stock market so it is definitely not easy to choose the best strategy among them. There are several things that traders should do in order to create a day trading strategy. First of all, they are recommended to analyze what type of trader they are going to be in the future. They should assess their trading preferences and goals in order to choose an appropriate strategy.
On the other hand, another important thing that they should do is to take a thorough look at each of the possible strategies, find all types of information about them and decide whether they are suitable for their future goals or not. Moreover, they should determine a market trend and determine their entry and exit strategy. This is how all professional traders create their day trading strategy, otherwise, there is always a big chance of losing a great deal of money.
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