4 Time-Tested Day Trading Strategies and Tips
1. Momentum Day Trading Strategy
Momentum trading is one of the simplest day trading strategies traders use to profit in the stock market. Generally, the market or stocks move in three directions - up, down, and sideways. A momentum trader analyses the news and stock updates to prepare today’s day trading tips. Once they identify the momentum or the direction in which the stock or the market will move, they make entry and wait for the right time to exit.
2. Breakout Day Trading Strategy
The breakout day trading strategy is one of the most effective day trading strategies applied by seasoned stock traders. A stock usually creates a range or price band and moves within that range for a considerable time. However, if there is any positive or negative news or event in the stock, it might break that range and move into new territory. The moment a stock breaks out from its usual range, it is referred to as a breakout stock.
3. Reversal Day Trading Strategy
The reversal strategy is the most difficult of all day trading tips and strategies mentioned in this article. Reversal traders are also known as contrarian traders. These traders identify opportunities to go against the market or stock trend. So, if the stock is bullish, the day trader will predict a resistance level and place a sell trade the moment the price reaches that level.
4. Scalping Day Trading Strategy
The scalping day trading strategy suits investors with a solid understanding of price movements. If you look at a stock chart, you will see waves created by price movements. The waves are typically more pronounced for stocks with high volatility. Scalping day traders or scalpers work on short time-frame charts, such as 1-minute or 5-minutes, to ride these waves.
Like contrarian traders, they draw support and resistance lines to place accurate trades. Scalpers generally create multiple trades throughout the day and ensure that the winning trades outnumber the losing trades
