Best Day Trading Strategies that work


Trader’s potential is determined by harmonizing of a few important features, which affect the shape and diversity of transaction. Personality features (this subject will be described by me very often), and the use of principles while investing is also a kind of foundation, which in combination with rational and consistent use of own investment strategy is a key to success on stock markets. Let’s focus today on preparing your own day trading strategies.

Your own day trading strategies

I emphasize here the word own investment strategy, because development of individual system or investment method is the first step to achieve the objective which is the success on stock market. It is necessary to realize that searching for own transaction system is not finding the “Holy Grail”. Seeking the magic key, which will enable to gain wealth, as well as the secret of all markets is impossible and constitutes waste of time.

Also being influenced by other, decision making under the influence of factors resulting from the strategy of other persons isn’t a positive thing. Only few persons may earn being influenced by advice of others, and the simplest example are analyses and recommendation of stock brokers, which are often false. However, the truth is that large numbers of investors, which in 90% make losses, are influenced by these reports. They don’t have, in fact, own system and conclude ill-considered transactions from which no good would come.

The problem lies also in the fact of using methods or strategy of various investors – usually the investor observing a given method (effective for other trader), modifies it a bit and “improves” in effect, thus it loses its features affecting greater success of the transaction. Each method is appropriate for its author, refers to “him”.

Psychology, personality features, own investment method. These three aspects, in combination with consequence are a base for preparation of appropriate day trading strategies, which best are expressed in words:

People can earn money on the stock-market, when they find themselves, when they free own potential and act in harmony with the market. (Tharp Van K.)

The entire period during which the trader learns, develops and acquires experience can be divided into three stages, each of which meets an extremely greater role in reaching a kind of investment maturity.

An important is moment when the trader begins to think of investing in the stock market not as fun, but as a serious job, which he treats the same as an analyst working for the bank or school teacher. As a job, which requires time, development, extending own abilities, concentration and multitude of other behaviors. As in any profession, one man becomes a trader, but other doesn’t. Competency in the profession is a kind of process that breaks over time, in certain stages, each of which is different from the next. I recommend you to read some articles of Mr. Brett Steenbager – trading psychologist with great experience!

Trading psychologists compare the trader with searching for own day trading strategies that reflects his personality, as in case of athletes, who at some point choose exactly this one sport to which they entirely devote training in their further career:

  1. First stage trader gets to know the stock exchange, he treats it as a certain kind of fun, with which at this stage not necessarily wants to involve his life. Therefore, all this is assessed in terms of pleasure caused by this activity. This stage is also associated with support, which at the time is received from superiors, older traders, but also family and friends. Often at this stage small successes may appear which additionally motivate the trader to further work and development, because he can see the potential, which can be effectively developed with appropriate use.

  2. Second stage it is associated with further trader’s development. At this stage he finds plains, on which he feels much better than on other. He directs his development, starting to treat this activity as a job, which by the way brings pleasure. Greater role at this stage has the authority, remarks, help and pointers, which are perceived with greater seriousness. Trader gains wired and detailed knowledge, he acquires a number of skills that are handed over to him by persons, who these two first stages already have behind, but also deal with these matters professionally. Talented traders at this stage begin to take the lead with respect to their partners, because still an important aspect for them is competition with other traders.

  3. Third stage it is possible to call the maturity stage. It is reached by traders, for who performed activities i.e. trading becomes their main professional job in life, but at the same time in which they achieve measurable and profitable results. Trader, who reaches the third stage of career, can discover his niche. Niche treated as own investment strategy, which fully reflects his personality and by which can be identified. At this stage, development of knowledge isn’t already an aim, but expanding own talent and abilities to maximum. Self-development becomes important, in addition to own abilities, of own psyche, which will be responsible for appropriate implementation of developed and used investment method.

Second and third stage it’s a time of seeking own niche on the stock-market. It is about finding a strategy corresponding to own psychological, personal predispositions. Some traders remain to the end in the first stage, because aren’t able to understand these factors, which distinguishes the normal, real work from fun. The man in a day processes extremely large number of information that surrounds us. The same regards the stock exchange – in a day the daytrader seeks a chance out of several thousand of listed companies. It is important to be properly focused in order to seek the most appropriate, because “jumping” between different strategies won’t let him to concentrate on the best. Those which succeed, start searching for own stock exchange niche on which they base their strategy, in which they feel secure. They find own specialization, in which they become experts for young traders, involved in the first stage of adventure associated with investing on the stock-market.

Before analysis of different investment strategies, which may be used in daytrading on US stock exchanges, each daytrader should prepare appropriate assumptions.

Very important to remember is the fact that no day trading strategies will bring 100% of relevancy. The attitude from which it results that developed system fully controls the market and has possibility to obtain inconceivable rate of return is a simple way to bankruptcy. All investment strategies should assume very accurate levels of exit from the market, whether in a form of cutting losses or profit-taking. Risk and capital management, depending on adopted strategy, is indispensable and very important in case of consistent using the given method.

Every man is a different individual differing from oneself. In accordance, it is necessary to assume that what for one person can be good and pleasant, for the second already not necessarily. The same is in transaction systems. Good trader has his own style, own strategy, which reflects his personality. Such a trader realizes that both profits and losses are a common factor of investing on the stock-market and assumes it in his transaction system.

What affect the ability to day trading

Authors of many books concerning the stock exchange and trading, pay attention to three aspects that affect the ability to invest on the stock-market:

  • Psychology

  • Capital management

  • Development of transaction system

Intentionally these three aspects are listed in such an order. Here the knowledge is omitted (knowledge of at least the basics is required) and experience, because it comes with time. It is a mistake to believe that the way to success leads through mastery of the given strategy, which is good for some investors, or mastering the most technical analysis indicators, and then to lead this strategy into practice. There is omitted an extremely important issue, to which Van Tharp attracts attention: “In order to perform some action, our brain has to process the information. Action is needed both to develop the system, and to bring it into effect. In order to repeat some behaviors, the man must learn elements of this behavior”. At this point the trading psychology gains importance, in my opinion it’s the most basic aspect of daytrading.

What is important when preparing day trading strategies

Prior to development of methods and investment strategy, it is necessary to make right assumptions, which shall be consistently followed:

  1. Adequate risk and capital management. Constant control of these two aspects decides about the risks incurred while entering any position and possible different between expected risk at the point of exit from the transaction to any loss, which trader is able to reconcile at the given transaction system.

  2. Selection of the position size. In this case, the best option is to prepare a kind of system to increase the size of opened position.

  3. Consequent observance of the principles, which are established while day trading investments

Principles are an individual matter of each of us. It isn’t possible to learn them by reading books, articles, listening to advice of experienced trader. Actually the life, i.e. the stock exchange, teaches us the principles and how to follow them.

Before I began trading on the stock-market, I’ve read much, and I looked through many sites where I could read about principles, which the beginner should accept. What was next? I didn’t obey any principle, until on own mistakes I taught them :)) It was painful, indeed, but at the same time most effective and instructing for the future. To this day it happens sometimes to ignore some principle. However, in most cases, it ends with loss. And why traders sometimes ignore the principle? It results from psychology…

In next articles you will learn about day trading strategies with examples.


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