Day trading strategies

Most often the term "day trading" means the act of buying and selling a stock within the same day. Day traders just try to make profit from a small price movements in a highly liquid stocks or indexes. Lets take a look at some common day trading strategies which can be used by retail traders.

1. Entry Strategies
2. Finding a Target
3. Determining a Stop-Loss
4. Evaluating and Tweaking Performance

Here are some basic principles which you can follow to become a proper day trader.

• Always make sure that your profit objective is at least 3 times greater than the amount you are willing to risk.
• Allow no more than a one percent move against you from your entry point. The point is that you should be in the trade beyond the trend line and out of the trade below it. You can always continue trading if the stock returns to the buy point.
• If the futures (Nasdaq and S&P e-minis) make an intermediate lower high intraday (or higher low when trading the short side), exit half of your position. This implies a weakening market and can make it toughter for open positions to continue working.
• If your stock hits a new low for the day (long trades) or new high - if you are short then exit the position. A day trade is intended for initial moves, so there is no need in widening stops to accommodate a stock moving in the wrong direction. Get out if the stock breaks a low (or high if short) because you can get back to trading when it'll trigger next time.
• Once momentum fades and buyers are thinning out - take your profit. This can be accomplished by monitoring the intraday chart and the time & sales for fading momentum.

I my opinion, only highly experienced day traders should start experimenting with strategy modifications - but the majority of traders should follow the strategies the learn without any modifications.