You may be aware of the fact that I am an avid intraday trader. When I say intraday, I refer to intraday and intraweek short-term strategies. Unfortunately, many professional traders don’t want to share successful trading methods, but that’s not true with my webinars and education. I always moderate with my broker – XM.
I know exactly how you felt when you started to trade, and I want to help you make profits out of financial markets, be it Forex, Cryptos, and Equities. However, my primary focus is on the Forex market, my trademark since I first became known as Tarantula.
Today, I’ll talk about the benefits of day trading and how often you should day trade.
Analysis and Daytrading
Short-term trading refers to trading strategies in financial markets in which the duration between entry and exit is 1-4 days.
My experience has mostly been with short-term trading methods, and I found these to be stress-free if applied correctly.
Being both a professional analyst and a trader, I’ve tried to put analytical strengths to work by developing a complex trading method that resulted in MEGATREND.
So, I tried to end up with the best of both worlds. I reap the rewards of my natural analytical abilities while making the trading end of things closer to manual labour.
My strategy acts as a filter for how often I should trade.
Intraday Daytrading Defined
Intraday trading deals with buying and selling pairs on the same day, usually during the main market hours and sessions. Major market sessions are in London, New York, and Tokyo.
Intraday trading is planned strategically, where profits are booked for the day. We refer to it also as day trading. There are five different types of intraday trading:
- Positional trades
- Scalp swings
- Counter trades
Positional trades are usually made on the same day. Traders use the ATR indicator and pivot points to profit on intraday price action. Profits typically go with 50-80% of the pair’s average ATR (14), and the suggested risk is 0.5-1% per trade.
Scalping is a higher frequency trading, where traders focus on lower time frames, trying to profit from the market’s volatility. Traders often make 15-30 scalps daily, whereas the profit is usually 5-15 pips. The risk with scalping is usually 2-5% per trade, but keep in mind that if you cross 5% of your risk threshold, your account will be in a danger zone.
Scalp swing is the term I use to describe the type of trading that is something in between scalping and intraday positioning. Trades usually last 5 minutes to 1 hour, and profits are approximately 20% of the Average True Range – ATR (14).
Breakout trading is a heavy, volatile price movement through support/resistance levels. Breakout trading is also a form of scalping when trades are typically closed randomly or around the next pivot point. The previous day’s high and low are two essential pivot points, for this is the definitive point where buyers or sellers come in the day before. Watch the market to either test and reverse off these points or push through and show signs of continuation.
Counter-trend trading is a reversal trading of the necessary historical/now-moment support or resistance level. I usually trade it when the price overshoots the ATR (14) – going well below or above the projected levels. It can also be a form of EOD (End Of Day) trading. Profits are usually close to Fibonacci retracement levels, as the counter-trend starts with a retracement first.
So, by using different intraday trading approaches, you will have many tools to profit from the market movement.
With the expansion of retail brokers (which, of course, should always be regulated), the population size of intraday traders operating in a specific intraday time frame (M1-H1) determines the profitability of the trader trading this time frame. As the number of traders trading particular intraday time stands increases, conversely, the competition also increases, and the markets become more efficient and easier to deal with, in my opinion. For that reason, my approach is the MTF trading with my MEGATREND method.
Having developed time-tested methods – I even accept the drawdowns as the price I have to pay, with occasional losses, too.
Volatility Is Your Friend
There is nothing wrong with trying out intraday trading. You only need to remember never to risk more than 3% of your trading capital on any trade. When a trend and good volatility back day trading, you won’t be late to discover trading opportunities and book your profits soon.
How Often Should You Day Trade?
Now we’ve come to the crucial question – how often should you day trade?
First, you need to have a clear trading plan. Trade what your strategy tells you. These are the rules that I follow:
- Monday’s opening is not suitable for trading. A lack of liquidity can lead to sharp movements without any logic.
- London open is good to trade. That one trade can make your day.
- Breakout trading is applied to day trading when a new high or low has occurred. Buy the first pullback after a new high. Sell the first rally after a new low.
- The last hour of trading, usually in London sessions, might often tell the truth about a trend’s strength. Smart money usually shows its face in the previous hour, continuing to mark positions in their favour. If a market has consecutive strong closes, look for the trend to continue. The uptrend is most likely to end when there is a morning rally first, followed by a soft finish, and vice versa for a short trend.
- I don’t trade on bank holidays or late Fridays.
- I don’t trade when the market ranges from 20-30 pips daily.
- Sometimes not having a position in the market equals having a profitable position.
- The first hour’s range should establish the framework for the rest of the trading day.
How often you should day trade is also determined by your trading strategy. Let’s say that your system makes 70% winning trades. If you skip day trading too many times, you are likelier to skip winning trades (70%) than losing trades (30%). Always try to find the balance; the above rules should help you!
So it is only you who stops yourself from being profitable. Now get into the action and Join my Telegram group via THIS LINK.
Read more: MACD 101 Absolutely The Best In-depth Guide to MACD Indicator
Cheers and safe trading,