Day Trading for Beginners: The Complete Guide

Don’t know much about day trading but want to use it for your investments? In this beginner’s guide, you’ll find everything you need to know to make more from your trades with intraday trading.

In just a few years, this trading technique has become one of the most popular investment methods among those looking to earn more, and faster, from their trades.

How does it work? Which strategies are best for beginners? What are your potential gains? You’ll find the answers to these questions throughout this guide.

What Is Day Trading?

So, what is day trading? Day trading, also called intraday trading, means buying and selling speculative assets on the financial markets within the same day. You’ll find various other names for it on forums, such as intraday or same-day trading, since it takes place within this clearly defined period.

In intraday trading, you can invest in the market of your choice without restriction. However, forex (FX) and CFDs are where you’ll find the most day traders, because demand rarely weakens.
In terms of position management and execution, day trading means that positions opened during the session are only held for that day.
Day trading is one of the timeframes that define the maximum period you can hold your positions. You can therefore benefit from assets’ various price moves within a single trading day and make money.

This lets you make each trading day pay by closing your positions at the end of each session, without carrying them over to the next day. Day trading usually focuses on the most liquid assets, based on market demand on the day.

If this topic interests you, also check out “Spread Betting for Beginners” and “Day Trading Definition“.

How Does Day Trading Work?

Day trading works by buying and selling financial instruments within the same trading session. Day traders close their positions when the markets close and repeat the process the next day.

What sets day traders apart from other traders is that they buy and sell several assets on the same day. Day traders often repeat this process several times a day to profit from price fluctuations.

Day trading, or intraday trading, isn’t suited to part-time investors. This speculative technique requires patience, a lot of concentration and the right mindset. Day traders need to make quick decisions and place many orders to make small profits each time.

Intraday trading is different from common investment strategies. Normally, you aim to profit from long-term price movements — the opposite of day trading.

Which Markets Can You Day Trade?

Contrary to what you might think, day trading isn’t only for markets with a known closing time. You can also day trade markets that are open 24 hours a day, or nearly.

In the end, there is no single best market for intraday trading. You can day trade whichever markets interest you, and invest as much time and capital as you like. The most common markets for day trading include:

• Stocks;
• Indices;
• Cryptocurrencies;
• Forex.

What Do You Need to Do to Start Day Trading?

Now that you better understand the definition of day trading, you probably want to try it. All you need to do is follow these steps:

• Choose the best financial market to invest in;
• Define your day trading strategy;
• Assess your strategy’s performance risk-free by opening an AvaTrade demo account;
• Invest for real by opening a live account and day trading at real market prices.

If you want to learn more about trading in Switzerland, France and elsewhere and improve your skills, we suggest taking a trading course. Once you better understand the basics of investing, trading will hold no more secrets for you. You can also read the other articles on our site to better understand trading and various stock market topics.

Day Trading Stocks

There are several types of stocks you can trade. Day trading stocks is particularly suitable for beginners, as well as appealing to them. In stock trading, positions are closed at the end of the day so there’s no gap.

As a reminder, a gap is the difference between one session’s close and the next session’s open. A gap occurs when factors cause a company’s shares to open higher or lower than the previous day’s close.

Find out where to buy stocks on our “Best Stock Broker 2025” page.

Day Trading Indices

Day trading indices has a lot in common with day trading stocks. For example, both are subject to limited trading hours. When you invest in indices, you speculate on the performance of a group of stocks rather than a single company. To do so, you need to choose the best day trading platform.

With the CAC 40, for example, you invest in France’s largest companies by market capitalization. Day trading indices gives you exposure to a more significant share of the stock market.

Day Trading Cryptocurrencies

Day trading cryptocurrencies is becoming commonplace, thanks to derivatives that let traders profit from both rising and falling prices.

The cryptocurrency market is always open, 24/7. Day trading crypto therefore avoids overnight funding costs, and day traders don’t have to worry about market moves during the night.

Day Trading Forex

The forex market is also an attractive choice for traders who want to day trade, thanks to the large number of currency pairs available and the market’s significant liquidity. Buying and selling currencies is very simple. As with the crypto market, forex day trading avoids rollover fees on positions and exposure to market moves overnight.

Key Concepts to Know Before You Start Day Trading

To day trade properly, you need to consider several very important factors. As explained at the start of this article, it’s a trading approach that requires time and patience.

Generally, investors focus on long-term market movements, where small moves have very little overall impact. With day trading, however, you focus on the factors that have a major impact on intraday market behavior. Here are the factors that influence intraday markets:

· Liquidity: liquidity describes a market where entering and exiting positions is very simple and very fast. High liquidity benefits day traders, as they can place several orders during the day.

· Volatility: volatility refers to rapid price changes. It’s also an important factor for day traders, who see high intraday volatility as a way to make many short-term gains.

· Trading volume: an asset’s trading volume is the number of times it is bought or sold over a given period. When trading volume rises, it means the asset is attracting a lot of interest, which makes it essential to define your entry and exit points.

What Is a Day Trading Strategy? Definition

A day trading strategy is the trading style a trader adopts when placing trades. Day trading isn’t really a strategy in itself, since it simply means not holding positions overnight. It’s better described as a trading style that encompasses several strategies, including:

Trend Trading

Trend trading is a day trading strategy that aims to profit by analyzing the direction of asset prices and buying or selling based on the direction of the trend.

When the trend is up, traders go long and buy the asset. Conversely, when the trend is down, traders go short and sell.

Trend trading isn’t only for day traders, since positions can be held as long as the trend continues. In day trading, however, positions are closed at the end of the day.

Swing Trading

Swing trading is a strategy that aims to profit from short-term price fluctuations. It assumes that prices don’t move in a single direction during a trend, so swing traders capitalize on the upswings and downswings that occur over short periods.

Swing traders prefer small changes in price movements. They anticipate these changes and capitalize on small market moves.

Scalping

Scalping is a short-term trading strategy that aims to make small but more frequent gains. In practice, it involves opening and then closing a position within a short time to benefit from small market moves.

Investors who scalp are called scalpers and often scalp several times a day. The strategy is based on the idea that small market moves are much easier to anticipate than big ones. And even though the gains are particularly small, scalping is much less risky, with minimal losses.

An Effective Scalping Strategy

Mean Reversion Strategy

The mean reversion strategy involves anticipating a return to a defined price level, or even two or three levels lower. Traders who use it can benefit from higher profit margins.

This strategy also relies on technical analysis to identify assets whose recent performance has moved away from their historical average. Traders using mean reversion profit when prices return to their usual path.

Money Flow Strategy

This strategy compares the number of orders placed during the current day to determine whether money flow is positive or negative. A reading of 80 or above means the asset is overbought and indicates to the trader that they can buy it. But a reading of 20 or below signals that it is oversold and gives the trader a buy signal.

How to Get Started in Day Trading

Step 1: Choose How You’ll Day Trade

To start day trading, you first need to choose the financial product to trade. CFDs are the most common for day trading because you don’t need to own the underlying asset to trade, which means you can open and close positions more quickly. You can also speculate on both rising and falling prices. For CFD trading, we recommend a broker with very good reviews.

Step 2: Create a Day Trading Plan

Before starting day trading, you should first define the goals you want to achieve — and make sure they’re realistic. Note that day trading requires a long learning phase, so if you want to make a profit right away, it’s not the right approach for you. To better define your market entry and exit methodology, you can take a trading course in Morocco, France or wherever you are, or use a demo account to find the best technique.

Step 3: Manage Risk

Risk management is also important during preparation. With measures that help you avoid worst-case scenarios, you can day trade with peace of mind. Ideally, choose a broker that offers risk management tools such as stop-losses and limits.

Step 4: Monitor Your First Position Closely

Once you’ve chosen the right trading plan, you can open your first position. As mentioned in step 2, it’s best to start with a demo account to avoid risk and refine your approach. With this account, you can open long and short positions without losing money. And since it’s day trading, you need to close your position at the end of the day.

How It Works: What You Need to Know

Before getting into intraday trading, there are some things you need to know. Investing is usually based on buying and holding positions over the long term.

This is called buy-and-hold investing, popularized by investors such as Warren Buffett. It lets you profit from price fluctuations when you sell in a mature market.

It lets you profit from price fluctuations when you sell in a mature market. This is how the stock market traditionally works.

Daily changes in asset values are barely noticeable there — almost the opposite of what you find in intraday trading.

Intraday trading relies on certain factors that influence market behavior throughout the day, including:

• The liquidity of the positions you take during the day. It should be easy to enter and exit a position without any particular difficulty. Liquidity is usually high enough to let you place several orders during the session.

• An asset’s trading volume is also a key factor. You need to assess demand for an asset to decide whether it can be profitable. The more in demand the asset, the greater the chance of making a profit in the very short term.

• An asset’s volatility offers better profit opportunities in intraday trading. An asset whose price doesn’t move reflects a stability that isn’t attractive for intraday trading. Daily forecasts need to point to high levels of movement, up and down, to create profitable short-term openings.

Solid knowledge of the market you plan to trade is essential to make money from your intraday investments.

Over a day, the market is constantly moving, and you need to know how to interpret these changes to decide where to put your money to maximize your chances of profit.
For example: if EUR/CAD moves from 1.9093 to 1.9095, that’s a difference of 0.0002, or 2 pips. In this case, the EUR/CAD pair becomes profitable and can be traded to profit from the difference.

Tips to Trade Better Intraday

How to Get Started in Intraday Trading

Before you start intraday trading, you first need to analyze the various markets and broker offers available to decide which one you’ll trade with.

The choice mainly depends on each trader’s needs in terms of the trading tools required to manage their investments.
However, we believe one of the best options is to go with a broker that gives you easy access to a market you already understand well.
It will be easier to understand what each move implies. You’ll then need to define a real strategy for your intraday investments.

Beyond managing your positions in the markets, you’ll need to work out how to enter and exit them optimally. You shouldn’t base your approach solely on avoiding holding positions overnight to eliminate overnight fees.

To really make money from intraday trading, you need more advanced methodical tools.

The Right Broker for Beginners

Several brokers let you day trade on their platforms, and choosing one can be quite tricky. However, there are a few important factors to consider when choosing a good day trading broker for beginners.

How to Choose a Broker

When starting out in day trading, the best choice is a broker offering the lowest brokerage fees. The higher the fees, the less chance you have of making your intraday trades pay.

The smoothness and robustness of the broker’s trading platform(s) are also essential. You should favor an online broker that offers smooth, fast market access at session opening and closing times.

Time is one of the most important factors when you choose to invest through intraday trading, as it generally affects the level of fees you pay.

For example, the consequences can be heavy if you can’t place an order or the process takes a very long time. This can quickly put you off the strategy while costing you a lot of your capital.

In a volatile market such as intraday trading, the broker must be able to give you significant room to maneuver in your investment decisions thanks to stable, fast trading platforms.

It’s always important to choose a reliable, reputable broker that can guarantee the security of your investments. We recommend choosing a CFD and stock broker with a proven track record.

Which Broker Should Beginners Choose?

The Best Brokers for Beginners

Based on the best overall trading offers, we’ve drawn up a selective list of online brokers best suited to intraday trading.

eToro: An Accessible, Interactive Platform

The Cyprus-based broker is one of the best-regulated brokers offering day trading. Through its dynamic platform, it lets you hone your intraday trading skills.

At eToro, you can access various financial markets to grow your capital. The broker defines itself as a multi-asset platform, which suits clients who want a wide range of offers from a single broker.

The Cyprus-based broker therefore offers the ability to trade just over 2,000 assets. By category, these include:

• CFDs

• Currencies

• Stocks

• Indices

• Commodities

eToro also has some of the lowest transaction and account management fees among CFD and forex brokers. Spreads depend on the instrument used.

Here are some spreads in pips on popular instruments at the broker:

• Forex: EUR/USD: 3 pips; GBP/USD: 4 pips; USD/JPY: 2 pips

• Stocks: Apple: 0.18%; Tesla: 0.18%

• Commodities: Gold: 45 pips; Silver: 0.029 pips
• Indices: FRA40: 100 pips

AvaTrade: A Wide Range of High-Performance Platforms

AvaTrade is one of the oldest regulated brokers, with a proven track record as a high-performing broker on solid foundations. It is very popular with traders, especially day traders looking for a legitimate broker.

It is one of the best brokers for beginners, thanks to its demo account for practice. It also offers an education section with many courses to learn trading terms and how to behave in a market with strong price swings.

The broker is also a benchmark for the number of quality platforms it offers clients, giving you the best tools for investing in the financial markets. Its platforms include:

• WebTrader MT4

• AvaTradeGo

• MetaTrader 4

• MetaTrader 5

• Automated trading

The broker has market analysis tools that are perfect for day trading beginners. Several intraday strategies focus on financial news to predict how prices will move.

AvaTrade provides news coverage on its YouTube channel, keeping you up to date on events that affect the financial markets.

You can also use its Sharp Trader technical analysis tool, which lets you statistically break down the movements of the various financial instruments the broker offers.

Day trading beginners can take advantage of a wide variety of financial products for intraday trading. The broker lets you trade:

• Forex

• Stocks

• Commodities

• Options

• Indices

• ETFs

• Bonds

Spreads at AvaTrade mainly depend on the instrument traded. Here are some spreads in pips on popular instruments:

• Forex: EUR/USD: 0.9 pips; GBP/USD: 1.6 pips; USD/JPY: 1.1 pips

• Stocks: Apple: 0.13%; Tesla: 0.13%

• Commodities: Gold: 0.13 pips; Silver: 0.029 pips

• Indices: NASDAQ 100: 1.00 pips (depending on the market)

IG Markets: Market Analysis and Structured Intraday Trading

IG Markets is one of the best-structured brokers for day trading. It suits seasoned traders and novices alike and benefits from the strength of its long history as a CFD broker. Its platform is fairly comprehensive, with precise charts for analyzing market movements in real time.

The broker also stands out for offering extended trading hours on no fewer than 70 US stocks and indices. With a minimum deposit of €300, you can access more than 17,000 stocks with a wide range of CFD products, turbos, barrier products and shares.

IG Markets has robust platforms suited to trading. The broker also offers the MetaTrader 4 platform and ProRealTime charts. As a client of this regulated broker, you get technical tools for fast and automated intraday trading.

As for day trading fees at IG Markets, spreads vary depending on the instrument used. There is no spread on stock CFDs, but commissions apply: a minimum of €5 on euro stocks, £15 on UK stocks, $10 on US stocks and CAD 25 on Canadian stocks.

In terms of other fees, the broker charges for real-time quotes, inactivity and currency conversion.

Here are some spreads in pips on popular instruments at the broker:

• Forex: EUR/USD: 0.75 pips; GBP/USD: 1.23 pips; USD/JPY: 0.79 pips

• Stocks: Apple: no spread but a commission of 2 cents per share

• Commodities: Gold: 0.3 pips

• Indices: CAC40: 1.00 pips

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Which Platform for Beginners?

Several platforms are suited to day trading, offering positions on various forex and CFD markets. As when choosing a broker, look for the platform that offers the most responsiveness and smoothness for intraday trading.

Your choice of platform has a significant impact on the quality and speed of your order placement during intraday trading. Some day trading platforms and apps are well suited to this direct trading method.

These include the intuitive MetaTrader platforms, which are very popular and simple enough to be perfect for getting started in intraday trading.

• MetaTrader 4 is one of the most recommended trading apps for forex trading.

It lets you carry out technical market analysis, which is especially useful when trading intraday on alternating price moves.

You can also find signals copied from other traders’ trades. All this makes it one of the best day trading apps for traders of all levels.

• MetaTrader 5 offers a wider choice of products. In particular, you can add stocks and futures to your CFD trades for your intraday positions.

Platforms from regulated brokers are also available and well suited to getting started in day trading. These include:

• AvaTradeGo: an intuitive, easy-to-use platform for day trading beginners

• ProRealTime: gives you access to real-time charts of market movements.

How to Learn Intraday Trading

As with any other winning approach to investing, the way you learn day trading is the same: above all, you need lots of practice to know how to handle intraday trades.

When starting out, it’s generally recommended to practice in realistic conditions on demo accounts with virtual capital. This helps you better understand market moves and see how the broker’s trading works.

Your choice of broker also plays a very important role in learning. A simple broker app lets you get used to its features very quickly, and charts should be presented clearly so traders can understand the various price changes.

However, the most effective way to learn is still live practice. It’s fairly risky overall, but it shows your real progress against the market. You simply need to choose one of the existing intraday strategies and dive in.

Intraday Trading Basics and Jargon to Know

Here are some terms and expressions you should know if you want to day trade. Day trading jargon is no different from general trading jargon.

Chances are some terms will sound familiar or you already know them. You’ll come across expressions such as:

• Technical analysis: mathematical and statistical analysis of a market’s movements based on its historical prices

• Economic calendar: information on forecast financial market events

• CFD: contract for difference

• Futures: forward contracts traded on an exchange

• Forex: the market for currency pairs, e.g. EUR/USD, GBP/CAD, AUD/JPY, etc.

• Chart: statistical data shown as a line graph explaining an asset’s price changes

• Liquidity: describes a position that is easy to enter and exit because of constant demand

• Spread: the difference between the ask price and the bid price
• Signals: indications of when and how to open a position likely to generate a profit.
• Volatility: the characteristic of an asset whose price varies strongly during a session.

How to Approach Intraday Trading

Getting into day trading isn’t that complicated, even for complete beginners. To start, look at the different existing ways to approach intraday forex and CFD trading.

Some are very popular with day traders and particularly effective. While intraday trading means buying and selling positions within a single day and profiting from the pip difference, a strategic approach guides how you enter and exit your positions.

There are several specific forms of intraday trading that can be perfect for a beginner and help them use market moves to their advantage. You can also day trade on an Islamic account, which we discuss in more detail below.

To approach day trading optimally, you also need to understand the concept of timeframes. In day trading, the timeframe is part of how time is divided according to how long positions are held in the markets.

The timeframe helps you position your approach to investing in forex and CFDs. This is where the daily division of position holding in the financial markets comes from.

How to Become a Good Day Trader

There aren’t many other ways to become a good day trader than constant, continuous practice. Once you’ve completed your training, don’t hesitate to day trade with a live account.

Only practice can give you the experience you need to become a high-performing day trader who makes a good living. Take online courses on the different variants of day trading to broaden your skills if necessary. The more complete your intraday trading knowledge, the better your chances of making a lot of money.

Trading Psychology for Intraday Success

If you really want to succeed in online day trading in France or elsewhere (Online Trading in Africa), you need to be psychologically prepared to face certain complications with your investments.

First, accept that however good your technical tools and however precise your analysis, you may lose money. However much experience you gain over time and through training, you may still not fully understand the complexity of day trading.

It’s almost impossible to predict market price moves exactly, whatever chart you use. You also need to understand that trading day by day is a fairly risky form of investing that can ruin you.

Step by Step: How to Build a Day Trading Strategy

Following these steps together will put you in the best position for intraday trading:

Potential Gains and Losses with This Trading Style

Financial markets are fairly volatile during an intraday trading day, which means the potential for maximum gains is high too. However, the leverage typically offered by brokers and intraday trading platforms is fairly high.
In day trading, for example, the chosen broker will determine for Tesla shares (as an example) the funds needed to cover the risk of a position.

If the margin is set at 1 to 60, it means you need €1 to cover a €60 position. This gives the commonly seen expression 1:60, where the maximum allowed leverage is 60.

This lets you rack up a significant number of pips with just a few trades, so you can benefit greatly from your investments over a very short period.
To make your successive entries and exits pay, you also need tight pricing from the broker: the lower the broker’s spreads, the bigger your profit margin.

You also need fairly substantial capital for trades to be truly profitable. The strategies traders use in intraday trading also considerably increase the chances of losing money.

Some variants of intraday trading are really aggressive in order to be profitable, but they also put your capital at risk. Reducing trade duration is generally a major risk factor.

Unfortunately, day trading, which mainly relies on a single session, is one of the riskiest investment approaches for your capital. You need to be very careful and not neglect the psychological factor if you want to come out ahead from your intraday sessions.

How to Limit Your Risk

If you’ve read this far, you’ll have noticed we’ve repeatedly said that day trading is a particularly risky way to invest. It requires availability, strong market knowledge, extensive trading experience and the ability to analyze quickly and meticulously.

It is therefore necessary — essential, even — to define a real risk management strategy for your investments. The aim is to limit the financial damage from bad analysis or bad trades. Some tools and methods exist to guard against the worst outcomes and minimize losses.

Stop-Loss

An intraday stop-loss is a specific order type offered by many day trading brokers to manage risk and limit losses during intraday trading.

It automatically closes a position if the loss threshold set by the trader is reached. It should be set after careful analysis of price moves, since prices can often change from one second to the next and become profitable again.

Setting a stop-loss depends first on careful market analysis, but also on the trader’s psychological state. Experienced day traders point out that most stop or limit orders placed depend on how the trader manages emotions.

Traders generally gauge, based on their feelings, the level of loss they can bear. So as a beginner, managing emotions is very important to set a stop-loss that doesn’t do more harm than good.

Martingale or Renko trading are other systems or techniques that can be used intraday and also in swing trading, but they are less suitable for beginners.

The Best Times to Day Trade

In principle, there’s no preferred time to get into day trading. As soon as you feel ready to make money quickly and enjoy your investments, you can start.

However, you need to be available enough to follow your positions constantly and handle the products you invest in effectively. As detailed above, intraday trading is quite different from other approaches to investing.

While the goal is still to make as much profit as possible from your investments, all trades happen over the very short term, so you need to organize your days around your intraday sessions.

You don’t necessarily need to trade every day to become a professional and make money. Even though this technique takes a lot of practice, a few hours a day can be enough if you choose a strategy whose logic you understand.

Can You Day Trade Full Time or as a Hobby?

Day trading doesn’t impose any rules on how much attention you give it, so the decision is yours. You can devote all your time to it or do it occasionally in your free time.

However, keep in mind that it requires a lot of concentration while you’re trading. Prices move by the second, and you need to be responsive.

If you want to make it a full-time activity, you’ll inevitably earn a bit more. The intraday approach requires a certain consistency that can work in your favor, and you can give it your full attention.

Making day trading a free-time activity can also be a good option. In that case, don’t hesitate to use tools that make investing easier — for example, using robots to manage your positions.

The Ideal Capital to Get Started

As a rule, there’s no optimal amount of money or capital to use this trading technique. However, there is a minimum amount that can give you a good margin on your investments.

First, it all depends on the means available to you. Next, what capital does your chosen broker require to start intraday trading?

Intraday traders, especially novice day traders, usually look for the broker that is most flexible on minimum deposits for day trading.

Some brokers accept as little as €1,000 on certain account types to start day trading. However, the potential gains relative to the risks of this approach don’t guarantee glorious profits that would let you make a living from it.

It’s often recommended to start day trading with initial capital of around €10,000. The risk you take on your round trips during the session drops significantly when your starting capital is relatively average.

You can trade intraday price moves without risking more than 1% of your capital per trade. This gives you a better chance of making your investments pay while reducing the risk of losing your capital.

What Success Rate Can Beginners Expect?

This is probably the most important criterion when getting into a form of online investing like intraday trading. It’s the ratio between the number of trades you make and the number of times you make money on them.

The success rate for day trading beginners mainly depends on preparation, strategy and the trading tools used to find a winning technique. However, you can have a low success rate and still do very well by the end of the session — a high success rate doesn’t always mean you’re making money.

You can only rely on the success rate if the amounts invested in each intraday trade are equal, which is almost never the case.
Note: a day trader’s success rate is not a reliable indicator of whether you’re losing money.

It is based solely on the number of intraday trades, without taking into account the amount invested in each trade.
That said, the success rate for a beginner day trader who hasn’t mastered trading tools such as leverage on CFDs and forex is put at between 20% and 30%. This doesn’t necessarily have a major impact on the gains you can make in day trading, which mainly depend on the amounts at stake.

Analysis in Intraday Trading

Since daily price changes are larger than in buy-and-hold investing, for example, intraday trading requires regular technical analysis of market moves to improve your reaction time to signals.

Intraday Technical Analysis

Technical analysis aims to help you predict upcoming asset trends in the various financial markets. It focuses purely on the technical side of market moves, using charts and historical prices to identify signals.

As usual in day trading, you can analyze an asset’s volatility, trading volume and the liquidity of a position. Technical analysis relies on mathematical data combined with statistics. Once your technical analysis is done, you can more easily decide which assets to invest in during the day.

Daily Chart Analysis

For chart analysis, some popular charts such as Heikin Ashi will be useful for your day trading strategy. Chart analysis is a subset of technical analysis that involves asking the right questions to determine the best positions on the D1 timeframe.

You’ll need to analyze the context of forex and CFD market moves to determine:

• Which assets are in an uptrend or downtrend?

• What are the underlying trends?

This analysis will always be more useful and relevant when done over a longer period than the one you plan to trade during the day. To increase precision, you’ll then narrow the analysis period using a chart with a shorter timeframe.

Hourly Chart Analysis

Chart analysis on the H1 timeframe helps identify the factors that will influence the day’s session. With a chart, you can make more or less accurate projections of potential resistance levels and profitable supports. Combining H1 hourly chart analysis with D1 analysis helps refine the day trader’s strategy.

Technical Indicators

Improving the quality of your entries and exits on a short timeframe requires real technical work on timing. You’ll need to understand and master the best indicators that technical analysis fundamentally relies on.

These give you a better reading of market analysis charts to decide when to take a position. Some fairly popular day trading indicators complement chart reading. By category, they include:

• The RSI (Relative Strength Index), a leading indicator used for divergence on forex

• Moving averages, a lagging indicator

• The Stochastic, an oscillator

• Bollinger Bands

• Fibonacci retracement

• Ichimoku charts

• The MACD

• Momentum

To determine the ideal indicator(s) for your day trading strategy, there are a few key points to consider upfront in your planning:

• The overall situation

• How responsive the indicator is to price fluctuations in the assets you trade

• How easy it is to use and understand

• Whether the indicator is free on the day trading platform you use

Analysis Using the Economic Calendar

Whatever your intraday strategy and analysis approach, you’ll need to follow daily market news. The economic calendar keeps you more or less precisely up to date on all the economic announcements that affect the financial markets — but not only that.

The economic calendar can also serve as an analysis tool, helping you avoid nasty surprises and sudden trend changes.

Using the economic calendar for intraday trading lets you break down:

• News on daily moves in forex pairs
• The exact release times of publications

Intraday Trading Strategies

Scalping

Scalping is one of the most popular intraday trading approaches. The concept is simple: whenever a position becomes profitable, you close it immediately.

Scalping targets a minimum number of pips, as long as they’re positive relative to the entry price. Depending on the position’s value, the exit price can boost the profit margin within a single session. Note, however, that compared with the risk of loss, the probability of gains seems rather small.

Trend Trading

The trend trading strategy is usually used for medium- and long-term speculation but is fully adaptable to intraday trading. It focuses on market trends.

Here, you follow the direction of asset prices to enter and exit your positions. To buy, the asset’s price trend must be clearly identified as rising.

Once the asset’s price trend clearly turns down, you need to exit your position. In intraday trading, this must be done before the session closes.

Retracements

One of the less popular intraday techniques among day traders, but just as effective for its purpose. The concept relies on an asset’s impulse moves and bases entries and exits on them.

Swing Trading

This is one of the most widely used buying and selling strategies among day traders. Swing trading aims to profit from an asset’s various price changes over the very short term.

It is based on the principle that a stock price never follows a straight line during a trend. It therefore examines trend variations closely so you can take advantage of the slightest upward or downward price move.

Here, swing trading is applied only to very short-term trading, which makes it a perfect intraday exit strategy.

Mean Reversion

This strategy starts by analyzing a price’s real-time value relative to its historical average to identify highly profitable assets. According to the theory behind this day trading strategy, prices and price-to-earnings ratios usually return to their historical average regardless of current trends.

The aim is to profit from this reversion by focusing on the assets furthest from their average. This requires in-depth analysis of specific indicators such as moving averages.

How to Enter and Exit Positions

Now we get to the heart of intraday trading. The various day trading strategies and sub-methods help you define how you want to make money from your intraday trades. As a beginner day trader, you first need to keep a calm head.

Identifying Entries

Once you’ve identified the securities and assets you’re interested in, the next step is to identify the best time to take a position and invest. This is usually called identifying or assessing entries.

To do this, you need to keep up with real-time financial news. Developments in the world of finance move stock ticks and create entry opportunities — and potentially profits.

Deciding When to Exit a Position

Once your positions are open, the goal of intraday investing is to close them by the end of the session and make a profit without paying overnight holding fees. However, there are some strategies for exiting positions throughout the session based on well-defined criteria.

As explained above, some of them are considered fairly risky, as they rely on extremely short holding times that increase the likelihood of a negative tick on your investment in very little time.

Conclusion

Day Trading Pros and Cons – We’ve listed the positives and negatives of using day trading for your investments.

Using intraday trading for your stock market investments is in principle a good idea. However, you need to carefully assess what you can afford to lose before getting started. Several day trading strategies are available to help with your money management and improve your chances of success.

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