Momentum Day Trading Strategies for Beginners: A Step by Step Guide

And on the day before the bullish reversal occurs the herd is in the "bearish thrill"-state as you can see in the following screenshot:

When I work with students I review their profit loss ratios (average winners vs average losers), and their percentage of success. The consolidation should be relatively small compared to the impulse wave that preceded it. This is one little tool that we think is indispensable. August 29, 2019: Trade the same stock(s) all the time. During the last 4-5 minutes of the video I cover one other topic we have been covering quite a bit lately.

Just fill out the yellow form at the top of the sidebar on the right. Run a stock screener each week to find two to four stocks that provide good volume and volatility, and then trade those all week. It’s a bearish market. The pros and cons of day trading futures. You will stay in trades too long because you “know” that the market will turn in your favor—no way could you be wrong!

  • If you’re looking for simple trade setups, flag trading could be right for you.
  • There are dozens of day trading systems, and we have chosen potentially one of the best Forex day trading systems.

The more complex I made my system the worse I did, over and over. Do not swing trade consecutively more than twice unless the swings are excessively wide (and even that will be risky). Here is what to look for. Of course, to do this you must be disciplined and think about your entry and exit before you even trade. – Based on the entry, stop loss and target price, your potential reward should always be at least 1. If you want a detailed list of the best day trading strategies, PDFs are often a fantastic place to go. An experienced trader may shift his tactics and hold a little longer, perhaps until the day when the market fails to make a new high.

For some reason traders believe that they have to be making money everyday, and this is potentially a trap that many traders can fall into. Waiting for a three-minute consolidation to form is recommended when you are starting out. The light green rectangles (labeled with the upward arrows) are showing the upward trend: Moves happen so fast that you need to be planning your trades before they even occur. Only after these price levels are reached the inverted Vs (sell trades) and the Vs (buy trades) are completed. Indian strategies may be tailor-made to fit within specific rules, such as high minimum equity balances in margin accounts. Yeah, he got that at the top and rode it straight to the bottom. Maybe the price will shoot directly upward to the target price level as labeled in the following screenshot:

  • There are a variety of methodologies to capitalize on market swings.
  • That should trigger a buying opportunity.
  • It’s better to get really good at a few than to be average and making no money on loads.
  • After we see a retracement and the touch of EMA21 or slightly above it, we then place a sell order of 1 pip (+the spread) below the low of the last candle.
  • Fortunately, with the help of a scanner, you can often quickly find the stocks that are surging and then consolidating to form the flag shape on the charts.
  • There are thousand ways to use edges of the bigger picture.
  • Bearish engulfing pattern.


The FEWER screens you can use in your trading the better. (Please watch this video first :) Trading during these time periods is more challenging. It’s much easier to achieve success if I have a 20 cent stop and 40 cent target vs a 1. Based mostly on the path of the preliminary impulse, await a breakout from the consolidation in that very same path. If I haven’t already sold 1/2, the first candle to close red is an exit indicator. I don’t even know exactly what willy-nilly means, but if you have to ask if your trading would fall under the “willy-nilly” category, then stop trading right f*&#ing now! Most traders should be looking at a benchmark score of around 8,000-10,000 Ghz if they want to be active and trading at speed.

This is where traders return from lunch and are looking to enter or close positions in preparation for the next trading day. The same principle applies to downtrends. Yeah, but look at this pattern—this could be the BIG trade—this could be $100,000 if I add contracts. The following screenshot shows the bigger picture, the trend on the time frame D1. I draw a downward trendline while being aware not to make it too steep. A fast processor gives you the edge. This usually happens over a period of a few candles and will be easy to recognize on a chart by the obvious flat top pattern. Twin 24-inch monitors on a dedicated trading computer, a third monitor shared through a KVM with 2 laptops and a desktop each with their own purpose and network.

For this peace of mind, you have to shell out an advance or down payment of sorts. My favorite is called Momentum Trading Strategy. The earlier an entry signal occurs in the day the bigger can be the subsequent move before the market goes into the slow moving Asian session. Each setup identifies a specific market condition that can be explained in terms of market psychology. The tick chart also helps me see when there’s little activity (no new tick bars forming), even though the 1-minute chart may still be moving around (but with very few transactions). Hypothetical performance results have many inherent limitations, some of which are described below.

  • An exercise you can do is to go over some previous trades and go to higher time frames (3-5x trading time frame) and see if your setups were taking place in a context that was favorable in the higher time frame.
  • V-formations also exist on the daily time frame!
  • Bigalow has traded the S&P E-Mini’s for years.
  • For the most part, you don’t scale into and out of setup trades.
  • Focus on implementing a winning plan–that you’ve practiced and honed–and you should be able to turn a profit at least 15 days out of a 20 to 23 trading day per month.
  • Annualize the historical volatility.

Debbie Hague

Someone did make $2,000,000 with this information though. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk of actual trading. Identify a stock or ETF where the weekly trend is up and the bottoms on the daily bar chart tend to be short and sharp.

Expect a reversal at 38% or 50% of the prior move. I have created 3 sets of stock scanners for 3 different types of scanning. You may not have these issues, so review the trading range rules and see if you have found a match for your trading style. If at any point you feel you’re making an extra effort to raise up your shoulders etc. As the name suggests, being able to identify flag shapes on a price chart is part of the setup.

Stock Trading Strategies

For example, if risking $0. This book has tons of graphs and examples. The top hedge funds in the world hire mathematicians, physicists, meteorologists… they are constantly shifting algorithms. However, not all day trading techniques and systems are the same. A setup is a particular configuration of trading price bars, usually with one or two other confirming conditions like a pattern or an indicator, that delivers an expected outcome in a high proportion of trades. Consistency – It’s harder than it looks to keep emotions at bay when you’re five coffees in and you’ve been staring at the screen for hours. Whatever hardware you buy, check out the CPU benchmark score for it.

If you’re looking at a selection of stands online, you’ll soon see that you have an option of having a wall-mounted stand or a ‘through the desk’ mounted stand.

How To Enter Extremely Early

A new profit release phase (a new 3-day-cycle) has started. It’s when you can do solid research and determine a stock’s history and potential future. When doing this bear in mind the asset’s support and resistance levels. How do I trade with it? “How can anyone make a living trading a system like that” I can hear you say! This is why a number of brokers now offer numerous types of day trading strategies in easy-to-follow training videos.

If it has returned to the moving average 3 times and penetrated it by an average of 1. The best trading setups can provide a risk reward that maybe 5, 6, 7 may be 10 times to 1. If your losing days are about the same as your average winning day, and you have 15+ winning days a month, you’ll do very well. A day trading setup, also known as an entry strategy, helps you identify trading opportunities, trends, and entry points.

Candlesticks provide a raw analysis of price action. When the EMA7 changes start to point upward, we should exit the trade. 58 but usually get filled a penny or two worse. The books below offer detailed examples of intraday strategies.

  • Purchased stocks are owned by a day trader for usually no longer than a few minutes (sometimes seconds) before they are resold.
  • It has even been linked to mortality.
  • Results will vary from trader to trader based on which trades they opt to take, and which ones they opt to avoid.
  • Secondly, you create a mental stop-loss.
  • When all the conditions are in place, it signifies a significant price move is ahead as indicated within the green circles above.
  • They will scare you by telling you you’re going to miss out on the next big thing.

Develop Your Skills And Your Own Style

To avoid risk and unnecessary losses, keep it simple and trade with the trend! To learn more about short selling, check out this post. And this “supporting evidence” is known as, confluence. The primary characteristics of the formation are an increase in volume with a sharp price move. Just make sure you don’t get shaken out too soon and know when the action is reversing. This will give us more structure on the chart. The truth is, great trading can be incredibly boring. ECNs, or electronic communication networks, are computer-based systems that display the best available bid and ask quotes from multiple market participants and then automatically match and execute orders.

How To Develop a high Probability Trading Strategy (a Template You Can Use)

It has to work. Such big winners can only be achieved with the tight stop of the day trading entry method combined with the trend of the bigger picture. The first trade was on the 20th and the second was on the 23rd of May 2019, with the second trade setting up during our live forex room. Corrections involve overlap of price bars or candles, lots and lots of overlap! This pattern could occur throughout the day, but keep in mind that the most significant moves in a market typically occur near the open. I wanted to trade that bounce. This is particularly important if you’re using margin. Almost anything.

You don’t believe me, that’s fine. You should enter sell trades when the price gets below of the lower boundary of the accumulation range. One laptop and one iPad.

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Day trading setups are another word for day trading strategies. So as you can see the green bar yesterdays high the green line I should say. The signal bar closed against your market bias. He still ended with an awesome five-month return… but you were a millionaire for a month and then not… well, it hurts. A BUY signal is generated when the price moves above the high of the narrow candle. Stocks that report negative news will often have large moves to the downside during pre-market and after hours.

In the following screenshot you can see that this setup could have produced a 13R winning trade. This page will give you a thorough break down of beginners trading strategies, working all the way up to advanced , automated and even asset-specific strategies. Let see how this plays out in the uptrend. So, with the right setup, you can reduce your trading anxiety and boost productivity.

People will devise elaborate narratives around their ideas they want you to buy into. If you’re long (bought) 500 shares, there will be 500 shares to sell posted on the Level II at your target price (if you place a target). If you’re trading a stock or ETF where you’re worried that slippage could be severe, don’t trade that stock or ETF. As a pattern based trader, I look for patterns that support continued momentum. I’d mess it up. We want to get as much movement out of it as possible if you really want a day trading setup that works in today’s markets. Yes, via EQUINIX NY 4 Trade Forex on 0. At point D, price made a green bar but rarely does a straight-line run down reverse after just one bar, so I waited.


Daily trading signals that your Forex daily strategy can provide you with is a key step towards your trading success. You will enter trades you aren’t supposed to because you’re afraid of missing out. If you would like more top reads, see our books page. In regards to the strategies below, a “consolidation” is when the price moves mostly sideways for at least three minutes (three 1-minute price bars). 1300, our potential loss is 50 pips. A sharp reversal to the upside with strong bullish full bodied candles will develop. Then it pulls back a little (but not 40% to 70%, so there is no trade for us) then rallies, but doesn’t make it to the prior higher, or reaches the same level (double top) or barely surpasses it. Velocity and Magnitude to help determine which trades to take.

I honestly can’t recommend anyone do that. Here is a video lesson going over a trade I took using this strategy: With the V-Power System you will be able to enter extremely early into the next 3-day-cycle with very high probability of success! Bid one cent above the consolidation excessive level for an extended commerce (shopping for within the hope of promoting later for a better value). Always make sure that strong movement and volatility precede the formation of the triangle, then draw the trendline once you see the triangle pattern forming. The price may then pull back and stall out, forming a consolidation where the price moves sideways for two or more minutes. There are multiple ways to exit a winning position, including trailing stops and profit targets. Scalping means holding a position for a couple of minutes or less.

It’s also worth noting, this is one of the systems & methods that can be applied to indexes too.

My Favorite Momentum Day Trading Chart Patterns

We are still not completely finished with defining our high probability day trading strategy. Next remote location? The stock then begins to consolidate in a range pattern that goes counter to the trend and volume completely dries up. And for the same reason many new traders will prepare for an entry in direction of the strong daily candle. Instead of looking at price, you’re looking at indicators (without understanding the purpose of it).

  • It’s also known as trend trading, pull back trending and a mean reversion strategy.
  • How to use it?
  • It gives insight into how the markets are shaping up for the open, major biases in the trend, and which stocks are moving (if you opt to trade big movers–finding stocks is discussed next).
  • Was this video on a new day trading setup that works in today’s markets, helpful to you?

The Final Accumulation By The Smart Money

As in the story I told above, trading based on hearsay or some popular narrative will lead you to almost certain doom! Many people have multiple computers lying around, however, it is kind of a hassle to have them all on one desk with multiple keyboards and mice. Kardashian family net worth 2019, at the time, the concept of search engine optimisation and Google rankings was in its infancy and few businesses recognised the importance of featuring as high as possible on Google's search engine to drive traffic. They can produce insanely big winning trades with a decent winning percentage! So you go home, lodge a $1000 into a trading account, SELL the EURUSD at $5/ point. Those positions should be closed when an opposing signal is generated. But for newbies, it may be better just to read the market without making any moves for the first 15 to 20 minutes.

You can “mix and match” different trading techniques I’ve shared with you earlier. You know the trend is on if the price bar stays above or below the 100-period line. So we can scan for the stocks squeezing up, forming the tall green candles of the Bull Flag, then wait for 2-3 red candles to form a pullback. If the stock went up initially from the open price, we only consider a long (buy) if the pullback that follows consolidates above the open price, then breaks that consolidation to the upside. If you don’t put a stop loss in your brain will justify your position over and over to you while your hopeful trade ends up losing you your house (and family). (So, let's move on :) Instead of having to manually flip through charts, I can instantly see stocks that are in play. So do your homework.

So the thinking is if we’re going to really get a market moving on an intraday basis where we can really date treat something that’s just not going to move sideways all day we want this thing to really move up and break yesterday high or break yesterday’s low. Move position to break even after 50 pips in profit. All good traders use stops, but if you have a problem obeying your stops, setup trading might be for you. Note that if you calculate a pivot point using price information from a relatively short time frame, accuracy is often reduced. They are not always reached due to tight management of the trade but when they are, they can add 20-30 points to your total.

Day Trading Stocks Between 10 AM to 11 AM and 3:30 PM to 4 PM EST

You see that massive move down? With the Bull Flag Pattern, my entry is the first candle to make a new high after the breakout. It is likely to correct to the new support level. This is about the lessons I learned while trading. Stocks that are chopping around sideways are useless. Likely you should use different parameters for mzBigtrade, mzMarketDepth and mzAggressiveTrade for different trading sessions and even adjust those during session time. Then begin introducing those feelings into your systems.

You don’t want to find yourself on the wrong side of the breakout, so be sure keep an eye out in case this occurs! At this point nobody knows (including me) that the smart money has actively accumulated a long position and will soon reverse the price and start a new 3-day-upward-cycle. The first pull back will typically take the form of a bull flag. These 3 scanners give me tons of trade alerts everyday. Stock scanners are what every trader today should be using to find hot stocks, whether it’s penny stocks, small caps, or large caps. You’ve got to aim for the “just right” Goldilocks zone — where you don’t hold on too long, but not too short a period of time, either. The price needs to drop from above the EMA lines to enter the area between two EMA lines.

Set aside a surplus amount of funds you can trade with and you're prepared to lose.

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You need to be able to accurately identify possible pullbacks, plus predict their strength. He gives clear, concise information and not much of a narrative, which is great for me but might not be for you. Here’re some examples: 10 minutes later that trend was broken. Moving averages are an important factor in determining support and resistance levels. Your stop should again be placed at the extreme high or low of the shadow candle and trailed to follow the trend. The smart money stops the move by heavily absorbing all incoming orders from the herd.

In his interviews with some of the world’s best traders, Jack Schwager (Market Wizards) hears a consistent theme from many of these top traders.


My favourite would be: A strategy doesn't need to win all the time to be profitable. Risk capital is money that can be lost without jeopardizing ones’ financial security or life style. Instead, stick to high-quality trade setups and take the easy money. I keep things simple and trade liquid stocks between $10 – $70 with a minimum of 2 million shares traded daily. Heikin-Ashi chart looks like the candlestick chart but the method of calculation and plotting of the candles on the Heikin-Ashi chart is different from the candlestick chart.

Because we are slow (very very slow) compared to these guys. For many, the quick pace of day trading can prove a little bit overwhelming at first. Then you get really obsessed about it. If you got value from this, share it. These highly liquid trading entities make for excellent trading vehicles for day trading. Another benefit of the short term involved is that it allows traders to zero in on the work involved in coordinating entry and exit of the trade. If there’s a consolidation within a consolidation (look closely at a couple of the chart examples above)–I typically use the smaller consolidation breakout for my entry and the larger consolidation for my stop loss placement.

But the further you go away from these key turning points the lower the probability will be that the price will reach this price level. The useful strategies that I know differ a lot regarding the time and effort you need to invest to trade the setups and how easily they can be (at least partly) automated. The EA automatically adds the necessary structure to the chart and makes the analysis for you:

As you can see in the rectangles in the following screenshot pin bars with long wicks can develop.
The panic of the traders of the herd produce the momentum for the Level1 of the new 3-day-cycle.

Detecting High Probability Setups On H1

In the example above, the ATR is 71 pips. 1200, our potential loss is 50 pips. When price reaches the 38% level and the market reverses trend and the stock ticker tape slows or stalls, then close out the trade. Past performance is not an indication of future performance.

Don’t Skimp On A Stand

Or bid one cent below the consolidation low point for a short trade (selling borrowed shares in the hope of buying them at a lower price before returning them to the lender). This must be determined before you enter a trade. Below I have compiled a list of six options to help solve this problem. We want to see the producers make a significant move in the direction of our potential trade. In this case Extra BUY or SELL triggers can be used to add to positions. Now the 15 minute chart should be perused. This process goes on and on, for what feels like ages, and by the time the stock finally breaks out, you already knew you were toast two hours into the formation. As you read in the article "The Smart Money 3-Day-Cycle" I call the first day of the 3-Day-Cycle Level1.

So hold back for the first 15 minutes, you’ve still got hours ahead. Using the signals at the proper stochastic period can produce consistent day to day profits. To do this effectively you need in-depth market knowledge and experience. You’ll gain a greater education on it and much more. Clicking any of the books (below) takes you to Amazon. However, you must ensure you’re aware of upcoming news and earnings announcements. Your ability to accurately pre-screen a breakout will determine how often the stock will continue in the direction of the primary trend. These are the stocks I trade to make a living as a trader.

You determine the amount to trade only once. An error which can lead to catastrophic losses. The latter option lowers your risk and increases your upside potential. Stop losses should be market orders — as soon as the stop loss price level is touched the stop order is executed and takes whatever price it can get. They are patient, they look for the best trading setups and they follow the trend. Your example chart here shows range trading over several days. This is one of the moving averages strategies that generates a buy signal when the fast moving average crosses up and over the slow moving average.

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That means the entry point should be $0. The important benefit of day trading is the fact that your capital is only at risk for short periods of time. Monitors are not necessarily expensive, but you will still need to find one that has good screen resolution.

And the automatic technical analysis of the V-Power Trading System will guide you to high probability entries into these Level1 moves. For example, some countries may be distrusting of the news, so the market may not react in the same way as you’d expect them to back home. Don’t trade stocks that aren’t on your list.

The next section will explain in detail how you will be able to do that and how you can even automate the trade entries and exits with the V-Power System.