Day Trading Techniques: A Few Basics
Mechanics, programmers, and even surgeons have their own special techniques they apply to their specialized fields when solving problems. Day traders are no different. There are many types of investments available to trade across many global markets. Techniques vary in how often assets are monitored (continuously, every few minutes, every few hours) and timing of trades (some may prefer post-close activity while others tend to trade primarily in the early minutes of the opening bell).
Financial tools traded (stocks, bonds, futures, options, Forex, etc) and methods of monitoring and trade timing combine to formulate a trading technique or strategy. Every day trader will apply their own twists to hone a personal technique but there are a number of common general techniques in practice, especially for beginning traders.
Day Trading Techniques and Strategy
There are a few attributes common to most day traders that contribute to financial success:
Planning and discipline – traders formulate a plan for what assets they want to focus on (usually not a broad range of for any individual trader) – one who focuses on Forex will not typically wander heavily into commodities or futures but will develop in-depth knowledge of Forex trends and opportunities. Discipline comes into play as traders set limits for their own investments such as limiting a single trade to a percentage of their total available capital (such as 10%). This limits exposure from trades that don’t produce the anticipated results.
Continuous education – successful traders learn from mistakes as well as successes and never stop the learning process. Keeping a log of trades made and their respective results provides significant value when reviewing what worked and what did not do so well. Even more helpful is jotting down reasons for making the trades at the time you exercise the order. Traders can evaluate the logic used in making decisions to hone future strategy.
Trading based on breaking news – day traders can take advantage of news events that impact the stock market such as falling oil prices, mergers and acquisitions, etc.
Range trading – by monitoring a specific segment or stock to detect a cyclical pattern of price points day traders can execute buy orders at the bottom of the range and sell when the price increase to near the top of the range. Not foolproof, but with patience this technique can pay off.
Learn to read and understand charts – more than just the well-known stock ticker there are numerous charting techniques that provide crucial information for day traders. Use of charts and analytical tools provided by your online broker gives you a significant advantage over less-informed investors. Charts are provided that reveal trending market segments and individual stocks, as well as myriad indexes that can provide insight for trading action.
Simulations – new at day trading? Some online brokers provide simulation tools that allow you to trade using your techniques against historical information to see how execution of your strategy and techniques would have performed. There are also brokers who establish limited ‘trial’ accounts that allow you to invest in the real world without committing any actual capital to see how your trades work out.
Applying Your Day Trading Technique
Analysis and education are critical to your success as a day trader along with tools and flexibility made available to you by your online broker. Start by partnering with a broker that provides the tools that match your strategy and trading preferences.
SureTrader is a leading online broker with the tools that complement various day trading techniques. SureTrader provides friendly and courteous support available to our clients on a 24×7 basis to answer any questions and resolve problems.
SureTrader’s desktop and mobile applications ensure timely and flexible access to SureTrader services – iOS and Android platforms are each supported. Global access to services enables quick and easy trades even in after-hours trading.
Contact SureTrader right away to get started doing online trading with the best in online brokers.
Disclaimer: SureTrader Blog is not intended for U.S. persons. Stock information is not to be viewed as buy or sell recommendations.