Why you need to learn day trading strategies

March 31, 2017

If you’re considering day trading, you should know that it’s not enough to simply get started. You need to learn the main day trading strategies so you can understand how to manage risk.

Day trading involves analysing a lot of charts and simultaneously studying the markets in real time. While normal trading involves buying shares and holding them for a long time, hoping that they increase over the long term, day trading is different. With day trading, you buy shares and aim to sell them for a profit that day (sometimes just a few minutes laters).


Day traders have to be great at finding volatile stocks so they know which ones to pick. That means continually watching the news and setting up alerts for articles about key companies so you’ll know when to buy and sell.

You can trade with either margin or cash. Margin means you’re using borrowed money, and the idea is that you can make a profit on the money you’ve borrowed. You just need to be extremely good at managing risk.

The two most popular strategies for day trading are the Momentum and Reversal strategies. If you haven’t yet heard of them there are a number of different courses for beginners so you can learn about the type of stocks to trade, how to find those stocks, the best time of the day for your trading, how to set your stop loss, and how to analyse chart patterns.

So how do you choose the best strategy for you? Learn all about them and pick the one that best matches your availability during the day, your level of skill, and your tolerance for risk. Once you’ve learned the basics of day trading you can begin putting them to the test with a simulated trading account. This is just like trading in the real world only you’re not using your actual money.

When you’re using your simulated trading account, you should always trade as if you were in the real world though. This will allow you to get better at making quick decisions, and help you hone your basic skills while trading.

Smart day traders have a pre-determined level of risk, and will cap their losses going into the trade. Trading is all about setting your own rules based on your risk tolerance, and many beginners go wrong by getting excited under pressure and holding for too long. They’ll also hold for longer than they should when the stock is down, which means they end up losing much more than they need to- they could have gotten out with a minimal loss instead of losing a lot at one time.

You’ll also need to learn about scaling in and out and penny stocks. Often beginners will wait until they have winning trades but won’t get out- they’re hoping for a bigger win. This is sad because when these prices suddenly drop you’ll lose all of your profit.

As you can see, while day trading can be very lucrative, you need to ensure you understand the strategies before you begin trading.