Strategies for day trading options

Trading on margin means that you are borrowing your investment funds from a brokerage firm. When you trade on margin (and bear in mind that margin requirements for day trading are high), you are far more vulnerable to sharp price movements. Margins help to amplify the trading results – not just of profits, but of losses as well, if a trade goes against you. Therefore, using stop-losses , which are designed to limit losses on a position in a security, is crucial when day trading.

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As a beginner, it is advisable to focus on a maximum of one to two stocks during a day trading session. With just a few stocks, tracking and finding opportunities is easier.

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Many orders placed by investors and traders begin to execute as soon as the markets open in the morning, contributing to price volatility. A seasoned player may be able to recognize patterns and pick appropriately to make profits. But as a newbie, it is better to just read the market without making any moves for the first 65-75 minutes. The middle hours are usually less volatile while the movement begins to pick up towards the closing bell. Though the rush hours offer opportunities, it’s safer for beginners to avoid them at first.

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There are times when the stock markets test your nerves. As a day trader you need to learn to keep greed, hope and fear at bay. Decisions should be governed by logic and not emotion.

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In the below images we can see the price action pattern variation and compare them to the outlined price action pattern above. The only main difference is that you are looking for a breach of a previous swing high or low as the first qualifier

There are many candlestick setups that we can look for to find an entry point. If properly used, the doji reversal pattern (highlighted in yellow in Figure 6) is one of the most reliable ones.

Recognizing The Trapping Patterns Seen Before Forex Market Reversals In this video I show what I look for via candle patterns that show me the probability of the banks that

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Decide what type of orders you will use to enter and exit trades. Will you use market orders or limit orders ? When you place a market order, it is executed at the best price available at the time thus, no “price guarantee.” A limit order, meanwhile, does guarantee the price, but not the execution. Limit orders help you trade with more precision wherein you set your price (not unrealistic but executable) for buying as well as selling.

In most cases, you'll want to exit an asset when there is decreased interest in the stock as indicated by the Level 7/ECN and volume.

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