Although I recommend futures trading for intraday traders , the choice is yours. The only rule is that you must understand the market you choose to trade. You will not know if you are more suited to quick scalping or daily swing trading. Should you trade the 5-minute time frame or the daily charts? Hence, you can start by considering your circumstances. If you have time to watch the market for extended periods, try intraday trading. When you trade fast time frames, you get fast feedback to shorten your learning time. Even if you end up with longer timeframes, what you learn from intraday price action will still be useful.
Of course, if you are not able to watch the market for extended periods, start with end-of-day charts. With sustained effort, you can learn enough to decide if swing trading is for you. You trade when the market is rising, and you use a bullish Pin Bar to trigger your trade. You trade when you judge that the market is going sideways, and you use a Gimmee Bar to enter the market. You can choose price action tools like swing pivots and trend lines.
10 Steps To Creating Your First Trading Strategy
You can also use technical indicators like moving averages and MACD. Even with the right market context, you need an objective entry trigger. It will help you enter the market without hesitation. Both bar and candlestick patterns are useful triggers. If you prefer indicators, oscillators like the RSI and stochastics are good options too. You need to plan how to exit when things go wrong.
How to develop a trading strategy
The market can go against you, causing you losses beyond your imagination. Having a stop-loss is critical. Learn how to place a stop-loss here. You also need to plan how to exit when things go your way. The market will not go your way forever.
Hence, you need to know when to take profits. Learn how to place a target here. The primary way to do so is by position sizing. For a given trading setup, your position size determines how much money you are putting on the line. At this stage, your trading strategy is simple. You might be able to memorise the trading rules.
Create Your Own Trading Strategies
However, you must still write down your trading rules. Having a written trading plan is a robust method to ensure discipline and consistency. It also provides a record of your trading strategy.
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You will find it useful when you are trying to refine it. If you have a discretionary trading strategy, backtesting can be an arduous process. You need to replay the market price action and record your trades manually. Nonetheless, looking through the trades one by one is a great way to develop your market instinct.
Doing so can also help you think of ways to improve your trading strategy. Your first trading strategy will not be profitable. Your trading strategy is a living object. It is not static.
Plan how you will obtain feedback and improve your trading strategy. Forward test your trading strategy. Plan to take good notes of your market observations. Record your trades and keep your chart images in good order. Trend traders need to be aware of the risks of market reversals, those which can be mitigated with a trailing stop-loss order. Several trend-following tools can be used for analysing specific markets including equities, treasuries, currencies and commodities.
However, with enough confidence in their trading system, the trend trader should be able to stay disciplined and follow their rules. Traders who use a scalping strategy place very short-term trades with small price movements. As a scalper, you must have a disciplined exit strategy as a large loss can eliminate many other profits that have accumulated slow and steadily.
When it comes to trading strategies, they can all perform well under specific market conditions; the best trading strategy is a subjective matter.
A key thing to remember is that the best traders are adaptable and can change their trading strategy based on opportunities. Nevertheless, remember not to become disheartened if you encounter initial losses on your capital. Patience is key when learning to become a successful trader, and mistakes and losses are inevitable in order to grow and develop your trading skills.
Successful traders often track their profits and losses, which helps to maintain their consistency and discipline across all trades. Consult our article on creating a trading strategy template that could help to improve your trade performance. Experience our powerful online platform with pattern recognition scanner, price alerts and module linking.
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4. Day trading strategy
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Step 1: Time Frame
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