3 Best Day Trading Strategy for Newcomers
A best day trading strategy that newcomers can use as a starting point to learn and improve while minimizing the losses.
Profits should not drive beginner traders. Instead, their best day trading strategy should focus on controlling the risk and developing the trader.
Day traders who are just starting out should not be led into the glamour of the raking profits day after day without first knowing the risks of day trading. For a long career in the market, day traders must be able to learn from trades and develop the right trading attitude.
Look out for the day trading strategies with the following characteristics to start the day trading journey right.
1. INFREQUENT DAY TRADES FOR NEWCOMERS
Newcomers should trade infrequently. For traders who are still grappling with their trading edge, trading less is better than the trading more. It is a form of risk control.
Trading infrequently gives you time to learn from your trades.
You will be able to develop a greater awareness of your emotions and keep them in the check. Taking dozens of trades in a flurry will only cloud your analysis and fuel the feelings of fear and greed.
Follow these tips to trade with the lower frequency
- Avoid scalping strategies.
- Trade higher time frames.
- Be very selective and take only the best trades.
2. DAY TRADE WITH THE TREND
Day traders like to boast about picking the top of the day or low of the day. When you do get the top or bottom of the trend, you feel like a star. When you do not, you feel like a failure trying to fight the trend that appears to go on forever.
Trading is not about stars and losers. It is about persistence and patience.
A trend trader must be patient and wait for the trend to develop. A trend trader must also be persistent in taking trades with the trend and not be tempted to pick the top or bottom.
Trading with the trend helps a newcomer focus on the right state of mind necessary for consistent profitability.
3. Passive Position Management for Day Trading
A newcomer day trader should set the stop loss and target for each trade, and leave them alone. Do not adjust your stops and targets.
A newcomer is prone to adjusting their stops and targets emotionally.
They make adjustments because they are affected by the blinking profit and loss figure on the screen. Only confident and experienced traders who can handle their trades based on objective analysis should do so.
Rather than meddling with the position when you have neither confidence in skill nor control of emotions, leave your stop and target alone. Rather, take out a piece of paper and write down what you would have done if you were managing the position actively. Your focus is to learn.
Once you have a sizeable sample, compare the results of passive management versus if you had managed it actively. You can then judge if you should be actively managing the trades.
This rule of passive management will also deter a newcomer from cancelling the stop loss order.