Day trading strategies

Day trading means all positions are closed before the session ends, so there is no overnight risk. A strategy turns that into rules: the setup, the trigger, the stop, the target and the size.

Most day traders use the 5-minute or 15-minute chart for entries and the 1-hour or daily chart for levels. Faster trading is covered in scalping, slower in swing trading.

Price leaves a range or crosses a level that has held several times. The trade follows the direction of the break.

• Entry – a candle close beyond the level, or the retest of the level after the break.
• Stop – back inside the range, beyond the breakout candle.
• Target – the height of the range projected from the level, or the next level on a higher chart.

In an intraday trend, price moves in legs and pauses between them. The trade enters on the pause, in the direction of the trend, instead of chasing the leg.

• Entry – a pullback to a short exponential moving average, a prior level or a Fibonacci retracement, followed by a candle back in the trend direction.
• Stop – beyond the low of the pullback in an uptrend, beyond its high in a downtrend.
• Target – the last swing high or low, then a trailing stop if the trend continues.

On many days price moves sideways between two levels. A range trader buys near the lower level and sells near the upper one until the range breaks.

• Entry – a rejection at the edge of the range, for example a long wick at support or resistance.
• Stop – just outside the range.
• Target – the middle of the range or the opposite edge.
• Filter – a flat ADX or narrow Bollinger Bands point to a range rather than a trend.

VWAP is the average price of the session weighted by volume. Many intraday traders treat it as the fair price of the day: above it buyers are in control, below it sellers.

• Trend use – in a rising session, buy pullbacks that hold above VWAP. In a falling session, sell rallies that fail below it.
• Reversion use – when price is stretched far from VWAP on a quiet day, trade back toward the line.
• Stop – on the other side of VWAP for trend trades, beyond the extreme for reversion trades.

The opening range is the high and low of the first minutes of the session – 5, 15 or 30 minutes are common choices. A break of that range often sets the direction for the next hours.

• Entry – a close above the range high for a long, below the range low for a short. A more patient entry waits for the pullback to the broken edge.
• Stop – the middle of the range or its opposite side.
• Target – one or two range heights, or the nearest daily level.
• Session times matter – see the trading sessions guide.

• Risk a small fixed part of the account per trade and set a loss limit for the day.
• Know the risk-reward ratio before entering.
• Count the costs – spread, commission and slippage are paid on every trade.
• Avoid the minutes around major news unless the plan is built for them.
• Test the rules on history first. Replay mode on Charts steps through a past session candle by candle.

• Using a breakout strategy on a range day and a range strategy on a trend day.
• Entering on a wick before the candle closes.
• Taking a liquidity sweep of a level for a real break.
• Widening the stop after entry.
• Trading more after a loss to recover it.