Wondering how to start day trading without risking your money? Then you are at the very right spot, as in this guide we will explain a few best day trading strategies that you may include in your trading habit to make consistent gains. However, before you proceed further, make one thing very clear that there is no strategy that promises you risk-free trading. These strategies are used to minimize risk not to eliminate the risks as being risky is in the nature of Trading.
Without further ado let’s get started with our topic and know what are those amazing strategies can help you to minimize the risk to some extent.
What is Day Trading?
As the name suggests, day trading is the trading in which no position can be opened at the end of the trading day or even multiple times over the course of the trading day. Hence, there is no overnight risk involved.
In a day trading strategy, trade time ranges from very short term minutes or short term hours for as long as the trade is opened and closed. Day trading strategy can be highly beneficial if done correctly. But it also can be very risky for beginners who don’t have much knowledge about how day trading works. Day traders need to keep updated with the trending news in the market. Also, if you are looking forward to day trading then make sure to invest the money you can afford to lose else you will end up losing all you have invested. It also requires your dedicated time. That means the day trading strategy is only for those who are willing to risk their money and time.
Things to consider before applying day trading strategies
There are a variety of trading strategies out there that you can use for day trading. But it is really very hard to find one that works the best for you. While choosing a trading strategy there are many things that you should take under consideration since every trader has their own financial goals. If you are gonna start trading without having a detailed knowledge of how to trade and how it is going to work then you are more likely to lose your investments. Following are a few metrics that you may consider before placing a strategy into action.
- Trading strategies require your time and energy, therefore before you start implementing a strategy ask yourself whether you can afford to devote your time or not. However, there are a few strategies that offer you to use the automation mode which allows you to do your other important task without worrying over implementing the strategy. Therefore, first, confirm whether the strategy is offering you an automation mode and if you are comfortable with the manual mode then ask yourself if you have enough time to devote.
- Another important thing that you should consider is that no matter what trading strategy you are implementing it sure involves risk to some extent. It is in the nature of trading. There is no trading strategy out there that can assure you 100 % safety. So, before you invest your money ask yourself whether you are ready to lose it or not. Dive in only if you can afford to lose.
- Another most important thing that you should consider is to compare two or more Day trading strategies and only then decide which one is better for you. There are thousands of strategies out there and each strategy varies from the other therefore it is essential to know which strategy is gonna work best for achieving your financial goals. Also, make sure to learn the drawbacks of your preferred strategy.
Day Trading Strategy 1 – Know Your Market
For every trader out there, the very basic yet important day trading strategy is to ensure you know and understand the market you are planning to trade on. That is, if you are planning to use a day trading strategy on Forex trading, then you must know all the basic terminology of Forex trading including all the pairs and the factors that are responsible for the movements of the currency. And if you are looking for crypto day trading strategies, then you must be aware of how the crypto ecosystem works. The same goes with every sector whether crypto, indices, stocks, forex or say anything. That key point here is that if you have all the inside-out knowledge of a market then the chances of gaining consistent gains increase.
Day Trading Strategy 2- Stay away from Volatile assets
This strategy is especially for those who are completely new to the world of trading. If you are a beginner then playing with Volatile assets can be very risky for you and can even cause you to lose everything you have invested. Either a pro trader or someone with a huge appetite for risk can handle volatile instruments. And, with Volatile instruments, we mean cryptocurrencies and penny stocks.
That means an inexperienced trader should trade assets that have high volume and high liquidity such as FTSE 100, blue-chip stocks, major currency pairs like EUR/USD and e.t.c.
Day Trading Strategy 3 – Understand your Orders
Another very important strategy to have the most out of day trading is to understand your orders, that is what position you are willing to take in the market with the help of your broker.
These orders are buying and selling orders, which is the most basic type. A buy order is placed when you think the price of the asset will rise similarly, the sell order is placed when you think the price of the asset will fall.
Another type is risk management orders, these orders are placed to minimize the risk involved in your trading. It starts with the stop-loss order, which ensures the risk of loss of an unsuccessful position is minimized.
Another type is taken profit order, which ensures the position is closed once it reaches the specified profit target.
Day Trading Strategy 4- Use Demo Account
Another most important day trading strategy in the world of trading is to use a demo account feature. A demo account allows you to paper trade and practice trading in a risk-free manner. It is the exact copy of a live trading account and is already funded with virtual money. With the help of a demo account, a trader can practice live trading without investing in real money. This feature is offered by many trading platforms such as eToro, Capital.Com and many more. Both of these mentioned trading platforms allow traders to practice trading through the demo account feature for as long as they want and do not compel traders to upgrade their demo account to a live account if they are not ready.
Day Trading Strategy 5- Stay updated with the Financial News
Another important day trading strategy is to learn fundamental analysis. It is also beneficial for those who don’t have a strong background in trading and don’t know how to read trading charts. Fundamental analysis is that you must keep updated with all the latest financial stories and news released by the media. If you are not aware of what is happening with the asset in the market you are planning on trading, how will you make the most out of it?
Well, it is nearly impossible to keep updated with the news of every asset, therefore we recommend you to stick with a particular trading niche. For example, if you are looking forward to trading BP shares, then you must focus first on the news and stories related to commodity oil.
Bloomberg and Yahoo are the most popular economic news websites that send you all the latest news alerts on the basis of your preference. You can also choose to register on other economic news websites at your convenience.
Day Trading Strategy 6- Learn Technical Analysis
Being able to perform the technical analysis is the best trading strategy that can be very helpful for you in making the most out of your day trading. Technical analysis is being able to read, evaluate and interpret the pricing charts. To perform technical analysis effectively you must know how technical indicators work. This is important because as you know day trading positions are usually kept open for several hours or even for several minutes, therefore you are required to make fast entry and exit in the market which cannot be done without technical analysis.
Day Trading Strategy 7- use Automated Trading features
If you are a beginner and have no to zero knowledge of technical analysis that is how to read, evaluate and interpret trading charts then you can consider automated trading. In automated trading, the broker you choose does all the work from researching to analyzing to placing trades. The most productive automated day trading features are Copy Trading and Signals.
Copy Trading feature allows you to copy ongoing trades of expert traders. The minimum size of a copy is $1 so you should make sure you have sufficient funds in your account to be sure to copy all the trades by the trader you are copying. This amazing trading feature is offered by the most trusted broker, eToro.
Signals, the other day trading strategy is for those who prefer semi Automated Trading. In semi-automated trading, traders are required to place orders with their chosen broker. In order to use this day trading strategy, you are required to sign up with a trading platform that offers trading signals. Once registered, the signal provider will send you signals whether you should go long or short.
Day Trading Strategy 8- Find a low-cost broker
Last but not the least, the best day trading strategy is to find the best low-cost broker that meets your financial goals. There are thousands of brokers but you cannot choose the first one you see. There are a variety of factors that you need to focus on before choosing the right broker for you such as regulations, payment methods, customer service, fee and commission.
Below we are listing down the best brokers that we have in the market.
Best Trading Platforms for Day Trading
With thousands of trading platforms, it is still very hard to choose the one which works best with your financial needs. And, as the scams are increasing day by day in the financial market it becomes harder to know whether your funds are safe with the broker or not. Therefore, below we have listed the best-regulated brokers, which you can trust blindly.
eToro– World’s finest trading Platform
The very first Platform that we have on our list is eToro. It is the world’s finest trading platform that offers a variety of financial assets for investment including, Cryptocurrencies, Commodities, Indices, and Shares. It offers 800+ Shares globally. This platform allows you to trade stocks that are listed on the London, New York and Tokyo exchanges.
On this platform you are allowed to apply the leverage of up to 1:5 and even you can buy assets traditionally.
The platform is further regulated by the FCA, ASIC and CySEC. Even the platform is accessible to US traders as it is also registered with FINRA. Except you will be required to pay a 0.5% fee on all your deposits and $5 on every withdrawal. It is the cheapest brokerage platform in the UK.
For beginners, eToro provides the copy trading feature. This feature allows you to copy ongoing trades of expert traders. You can also use the copy portfolio feature, which allows you to diversify your investment portfolio. Unlike other platforms, account creation on this platform is not time-consuming. It takes only a few minutes to create an account on eToro. Once you are done with creating an account you are then required to fund it to start your trading journey. For the convenience of its user’s, it accepts various payment methods for making a deposit such as Debit/Credit Card, Bank account, e-wallet e.t.c. The fee attached to the platform is an inactivity fee of $5, which is understandable and also the spreads are relatively low. The platform also offers a mobile application for the convenience of its customers. This trading platform also offers 24/7 available customer support which other free platforms don’t offer. It also offers a demo account that is funded already with a $100k balance plus there are no limitations on using the demo account feature. You can practice trading on a demo account for as long as you want.
- Regulated by FCA, ASIC and CySEC
- Copy-trading and CopyPortfolio feature
- Offers a variety of financial assets
- Accepts debit/credit, bank account, e-wallet
- Fractional trading
- Offers 800+ shares
- Not suitable for advanced learners
Capital.Com– Best day trading platform
Another trading platform that scores the highest among all the platforms is Capital.Com. This trading platform is regulated by the FCA, which means all of your funds are safe on this platform. It offers a variety of financial assets so that its traders can have a better-diversified trading portfolio and allow them to trade CFD in a more sophisticated manner. That means this platform allows you to trade without taking ownership of the particular stock. It also offers you to apply the leverage of up to 1:5 which means you can trade your preferred share with five times the amount of capital that you have in your trading account. Also, on this platform, you can go long or short on your preferred shares that mean you get an advantage to speculate on the share price movements and predict whether it will rise or fall. Another amazing feature is that this platform doesn’t charge a single penny as a commission or a fee. Furthermore, the spreads are also tight making it ideal for day or swing traders. To start trading day trading on this platform with a UK debit/credit card or e-wallet, the minimum amount that you are required to deposit is £20 and it increases to £250 when opted for bank transfers. And, for the convenience of its users, the platform offers an intuitive mobile application.
- Offers commission-free trading
- FCA regulated Platform
- Offers a variety of trading instruments
- Allows you to trade 24/7
- Offers mobile application
- Tight spreads
- The minimum deposit required is £20
- When using Bank transfers, the minimum deposit amount increases to £250.
Plus 500- CFD Trading Platform
Another best day trading platform you can trust with your eyes closed is plus 500. Listed on London Stock Exchange under the ticker symbol PLUS, this trading platform is a well known CFD provider. The platform is regulated by the FCA and ASIC, which means you can trust the platform without stressing over money fraud. This amazing Platform gives access to a variety of different financial assets through CFDs with a spread of 1.25 or 0.07 % and 0.5 minimum deposit. On this platform, you will get access to the shares of nearly 500 companies, which means you can have a well-diversified portfolio. Moreover, it allows you to apply the leverage of up to 5:1 on your desired shares. The platform is fully packed with advanced charting packages, an economic calendar, risk management tool and price alerts service.
The regulation of the platform makes the platform a healthy choice as it makes sure that all of its traders’ funds are not compromised at all. Its parent company is listed on the London Stock Exchange. The account creation on this platform is not time-consuming. All you are required to do is to enter your few basic details, undergo a verification process, make a deposit and that’s all. To deposit on this platform you can either use debit/credit cards, bank transfers or PayPal.
- Regulated by the FCA
- Access to a wide range of investment assets
- Leverage of up to 5:1 for retail customers
- Easy and fast account creation
- Offers short selling
- Price alert feature
- Offers mobile application
- CFDs only
- Not beginners-friendly
How to start day trading with strategy
Below is the step by step guide to making you understand how you can get started with your day trading strategies today. Here, we are taking eToro as an example, as it is our most favourite trading platform. you can choose any platform of your choice.
Step1: Create an account
The very first step to start day trading on a trading platform is to create an account on the official website of eToro. To do so you are required to fill in a registration form by entering in your basic details such as your name, phone number, e-mail address, and setting a strong password. After entering all of your details make sure to accept terms and conditions. eToro will ask you to verify your identity by uploading some of your documents, don’t worry as your documents are truly safe on this platform. However, you don’t need to undergo verification until you deposit more than $2,250 or you request a withdrawal.
Step 2: Fund your account
Now that you have successfully registered on this platform you are now all set to fund your account by making a minimum deposit of £150. This funding amount isn’t the fee of the robot but the working capital that is needed by the traders to execute trades. eToro offers several payment methods for the convenience of its traders, you can choose whatever method you feel more comfortable with. The payment methods supported by eToro are Debit/Credit Card, PayPal, Skrill, Nettler, and Bank Transfer.
Step 3: Search for a Day Trading Market
Now that you have successfully registered and funded your trading account, you are now all set to search for the market of your choice. And, if you are not sure of which financial instrument you are willing to day trade you can browse on the ‘Trade Markets’ and select from a variety of assets that appear in front of you.
Step 4: Start Day Trading
You are now all set to deploy your chosen day trading strategies. All you are required to do so is to set up a trading order that is buying or selling, stop loss and take profit orders. You need to enter the amount of your choice and then click on the ‘Set Order’ button to place your day trading position.
All the above-mentioned day trading strategies are the best ones that you must include in your day trading so that you can make constant gains. Also, before you start day trading, make sure to choose the best trading platforms after measuring them on the factors such as regulations, Commission, spreads, Withdrawals and Deposits, and customer service. If you don’t have much time to find and check whether a platform is worth selecting, then you may choose from the above-mentioned trading platforms. However, the best platform in our opinion is eToro.
- What is day Trading?
A day trading is trading in which buying and selling are done within the same day or even multiple times over the course of the trading day.
- What is the easiest day trading strategy?
The easiest day trading strategy is fundamental analysis. In this strategy, traders enter a position only when important news breaks and on the basis of whether it is positive or negative news, traders buy or sell orders.
- What is the best day trading platform?
All of the above-mentioned trading platforms are the best. But, the very best platform that we have in our opinion is eToro. The platform is Commission free and offers various amazing trading features.
- What is the best day strategy for cryptocurrency trading?
The best day strategy for crypto trading is to avoid applying leverage and have a keen knowledge of major cryptocurrency pairs such as BTC/USD or BTC/ETH.
- What is the best day strategy for forex day trading?
The best forex day trading strategy is to learn technical analysis. Though, learning it isn’t easy and takes months to master.