Benefits of Day trading

Online trading and poker have incredible skill sets that reflect each other (risk management, emotional control, probabilistic calculation, ...) So if you have good skills as a trader, you most likely have a solid skill to make money in online poker (and vice versa).

I spent many nights with my trading friends playing poker. 75% of the time, we all make money. The last time I played poker with another trading friend of mine, I doubled my deposit and that success had to be attributed to my skills as a profitable trader.

When you look at online poker players, you will almost never see a single poker player playing on a single table. More than 80% of them are playing on multiple friends at the same time, with some people I know can handle 16 goals at once for hours in a row.

The same is true for Day Trading. If you have a profitable trading strategy and skill set, the more trades you make, the more money you will make because that advantage generates more multiples each day.

Technically, more transactions = more opportunities to make money. This is an advantage that Day trader has, which Swing trader does not own.

Another big advantage of Day trading is that you'll get more responses faster.

The more trading you do with a particular strategy, the faster you will know all the big and small details of that strategy, such as the environments in which it works best and the environments in which it operates. poor performance.

By being exposed to more candles, price action contexts, and structures, you will create a richer set of data to analyze, remember, and work with.

I could list a bunch of other benefits (such as being risk-free overnight), but for now, I'd like to move on to some tips, tactics, and strategies for Day Trading!

Day Trading Tip # 1: Don't trade against these

The first core model I use for trading in the context of price action on any timeframe, especially Day trading, is the "impulsive" price action (when the market goes up or down. in a strong one-way way - This is due to an imbalance between the amount of buying or selling in the market) and "corrective" (when the market goes up and down without a clear trend. correction of a trend).

I want you to do one thing: Take a look at all your losses, especially the losses you opened for trade, and look at how the price action played out after that. Count how many of them you traded against the impulsive moves?

I guess the majority of your losses are due to you trading against them.

If you find this to be true, then you should probably trade the same "impulsive" moves as much as possible.

Day Trading Tip # 2: Always trade with minimal risk vs reward

In one of my latest articles, I talked about 6 trading statistics that you should know if you want to monetize trading. One of them is from a study conducted by FXCM where they found that traders with a 1: 1 Risk: Reward ratio is 300% more likely to profit than traders who use ratios. R: R is negative.

This statistic applies to all timeframes and types of traders (Day trader or Swing trader).

Because you will trade more actively as a day trader, you will use your advantage in the market more often. Therefore, you must be extremely careful in making sure the math is going in your favor, as you are trading at a faster rate, which is putting your capital at risk more often.

So, don't use R: R ratios less than 1: 1 when Day trading.

Day Trading Tip # 3: Limit the number of instruments you trade

Due to the time-sensitive nature of Day Trading, every calculation, analysis, and decision you make must be done faster. The increased processing speed in your brain also overloads your memory and cognition.

Ideally, you should choose the currency pairs that best correlate with your area and time of day. So, if you are in UK / Europe / North America then the pair of USD with the European currency is OK. For traders in Asia / Australia / New Zealand, I recommend at least 2 currencies from your region (JPY, AUD, NZD, CNY, SGD, KRW) and a minimum of one USD pair.

If you are day trading on stocks I recommend trading one or two indices from your area, and at least one stock that is always volatile from your area. You can also look for an ETF.

If you are day trading in commodities, I recommend trading a natural resource, such as WTI / Nat Gas, a precious metal, such as gold/silver, and some agricultural products.

Quantity does not need to be rigid. But a general rule of thumb is to only deal with the number of tools that you can mentally handle. If it stresses your brain then you are probably over-trading.

Day Trading Tip # 4: Have a maximum risk scheme

I guess many of the struggling traders have come across how easy it is to risk, especially when you are on a winning streak. In order not to fall into the trap of over-trading and over-risking, I recommend having a risk scheme as a day trader.

A maximum risk scheme simply creates a threshold where when your losses for that day/week/month reach, you will stop trading for this time.

If you can only have one maximum risk scheme, that would be the maximum risk per month. If you are willing to have two of them (my minimum suggestion), then that would be your maximum risk per month and maximum risk per trade. A stronger risk scheme would be to have maximum risk per month / per day / per trade.

I recommend risking a fixed% per trade and generally no more than 1% per trade (at first, ideally <1% per trade). Every day, I recommend not risking more than 4-5R, so multiplying 4-5 times your maximum risk per trade is your maximum risk per day. Each month, I recommend a maximum risk of 9.9% per month.

Why 9.9%? Because statistics show that, with every drawdown of two or more digits in each month, your chances of recovering your account to break even decrease exponentially.

Having a maximum risk scheme will protect your long-term and keep you in the game when things get tough.

Day Trading Tip # 5: Plan your trades

As a day trader, you typically use a lot of working memory + brain processing power in your frontal cortex for all the decisions/calculations / analyzes you have to make in real-time with acumen.
For this reason, I recommend planning ahead for the following two:
  1. Pre-trade planning: This includes doing a context analysis of your price action before entering an order, along with identifying your main support and resistance levels, as well as the types of trading setup. transactions you want to make before time G. Of course, we can always be flexible to initiate new transactions if they appear, but we should always plan ahead so that when it's time to trade, you just need to do what has been prepared only.
  2. Plan for If / Then scenarios:
  • What if the direction of the trend is reversed?
  • What if you are stopped out and the market is showing a reversal setup?
  • What if the market breaks through key price levels that you think will hold?
By planning these in advance, you won't be tied to one side of the market, so there's the flexibility you can take advantage of if the market moves in the direction you least expected...

Day Trading Tip # 6: A good strategy can be as simple as targeting 15-20 pips a day

Since you want day trading, it is important that you look for goals that can be easily reached during the day trading or ideally the 24 hour period.

So whatever instrument you trade, be it Forex, stocks, indices, or whatever, the average daily movement and volatility of that instrument will make it easy to find The transaction will achieve those goals.

A simple way to do this is to drag the ATR indicator onto a D1 chart for your instrument and set it to 5. It will calculate the average daily range per day over a 5-day period.

For example, here is EURUSD, the 5-period ATR on the D1 chart is 50 pips with a high of 69 pips this year and a low of 30 pips.

This means, if you want to trade the EURUSD pair for the day, you can just earn 15-20 pips a day, which is a relatively easy target to achieve.


There are many more things I can say when it comes to Day trading, but the main points to keep in mind are:
  • Day trading has several key advantages over Swing trading when it comes to multiplying your earnings.
  • Day trading also has some specific challenges where Swing traders don't have to deal with the time pressure involved.
  • Only Day trade if it suits you personally and makes you feel comfortable.
  • Don't trade against "impulsive" moves whenever possible and make sure to plan as much in advance as possible.
  • Create the right risk scheme to protect you when you're not performing at its best.
  • Find sensible goals that are easily attainable throughout the day.