Day Trading Strategies

Nadia Jenkins

By operation, day trading strategies help traders open buy and sell positions in the Forex market within the same trading session. Profits or losses are then booked with no positions left to run overnight. Despite its great reward potential, day trading is always considered very challenging; with the dynamic nature of the markets making it an emotional and mentally draining activity.

To achieve success using day trading strategies, traders need to ensure they adhere to the following key guidelines:

Constant Education

We all understand that the Forex market is highly leveraged, operating around the clock, and offering traders unlimited profit potential (but with high risk as well). Nothing typifies these characteristics more than day trading. Day trading strategies allow traders to make huge profits, but one of the best ways to limit losses in the dynamic Forex market is constant education. By improving their trading knowledge, skill and technique continuously, traders will be able to understand the mechanics of the Forex market more as well as make much better decisions when trading.


Achieving trading success using day trading strategies obviously requires meticulous planning. Despite the numerous opportunities available in the market when day trading, it is important to understand that quality trumps quantity. The best opportunities in the market all have one thing in common - they have met all conditions set in a trader’s trading plan. It is therefore important to update the criterion in your trading plan, and even more importantly, to follow the trading plan with utmost discipline.

Trading Psychology

Emotions are the biggest enemies of successful trading. They are even more dangerous when applying day trading strategies in the market because trades are opened and closed within a quick turnaround time. It is very easy to make irrational trading decisions when day trading, which will in the end cause an emotional drain on traders. Traders should therefore strive to master their trading psychology so as to understand how their emotions react to their trading activity. By doing this, they will be able to ensure that emotions do not hinder their successful trading activity.

The Best Day trading Strategies

When day trading, it is so easy for traders to be bombarded with numerous false signals that can generate losing trades. It is therefore important to trade with solid and reliable trading strategies. For this reason, many traders usually apply momentum strategies when day trading. In Forex, momentum is defined as a strong advancement of price action in a particular direction. To be successful when day trading, traders only place trades when there is a clear price momentum in the market.

One of the best momentum day trading strategies is Stochastics. Stochastics is a momentum indicator that relates the current prices to previous highs and lows over a specified period of time. The indicator has two lines (%K and %D) that oscillate between values of 0-100, but there are two major horizontal lines drawn at ‘20’ and ‘80’. When the stochastic reading is below 20, it implies that the market is oversold and prices are likely to turn higher. Whereas, a stochastic reading of above 80 implies that the market is overbought and prices are likely to turn lower. But to trade in the direction of real momentum in the market, day traders usually watch the Stochastics centerline (the ‘50’ line). When the market is trending higher and the stochastic reading is above 50, it means that there is sustainable bullish momentum in the market and traders should seek to place Buy orders. When the market is trending lower and the stochastic reading is below 50, it means that there is sustainable bearish momentum in the market and traders should seek to place Sell orders.

Final Word

Day trading can be a very profitable endeavor, but also very challenging. To be successful, day trading strategies require great precision, sharp emotional and mental focus as well as meticulous planning.