Many traders and investors get confused when searching for a day trading strategy capable of working. They often feel that a strategy has to be complex and hard to understand for it to be successful. In fact, the opposite is true as the best day trading strategies are often easy to understand and simple in nature.
However, one should not assume that coming up with an ideal trading strategy that can work over time could be easy. It is just that once the trader has figured it out, its concept is relatively easy. Of course, there exist certain super complex strategies that can prove hard for a non-math wizard, but it is rare to come across them.
The first thing on an investors list of things-to-do when trying to come up with a top strategy is figuring out the kind of strategy it will be. Once this is done, they then decide if it will be a trend-following strategy or a counter trend one. Trend-following tactics are those that are only interested in doing trade along the current direction of a trend.
On the other hand, a counter strategy trades against the current trends. An investor should identify what they hope to create; otherwise they might end up following the wrong path. Another thing not to do is trying to make a jack of all trades system. Most times, such traders find themselves with something not likely to work it they fail to direct efforts on a specified trade system type.
As soon as someone decides the type of day trade systems to use, what follows next is market identification and time frames to be used. All markets trades in an alike way buy each having its own unique way of going about it. Stocks and Forex trade in a different way to futures and commodities respectively. Coming up with a strategy that could suit all markets is next to impossible; therefore one should just focus on the trade.
Investors and traders should incline themselves to markets whereby they have a significant trade experience, since it will come in handy in the development efforts they apply. What’s more, paying attention time frames of the market is vital since it has a say on the trading system type. Shorter term frames make less profit in the market as they are based in scalping systems.
The profits are bigger on larger time-frames since the market has more room for making bigger moves. The tradeoff includes the trading frequency and the risks involved. Short time-frames have lesser absolute risk per trade and more frequent trades. Long time-frames have a higher level of absolute risk per trade, while doing trades much less frequently.
The investor can begin to study the market as soon as they have identified the type of system, the market to trade in and its trading frequency. A wise thing to initially do is allocate a several indicators on a chart, such as MACD and stochastic. The idea here is looking for the best day trading strategies in order to get started.