Best day trading strategies that work

Everyone wants a day trading strategies that work and of course the best one!

But you have to decide which one is the best day trading strategy that work for you.
Because best in regard of

  • Profit
  • drawdown
  • risk
  • market

just to name a few points.

Let´s take a closer look at the different markets.

Day Trading Markets

You can make your day trading in different markets. For example:

  • equities
  • futures
  • forex
  • options
  • bonds

In each one you can be more specific:

Equities

  • equites at a specific marketplace, for example:
  • Nasdaq, NYSE, London, Frankfurt, Tokio,
  • equites at a specific market, for example:
  • Commodities (gold, silver,…)
  • Interest products (Treasuries 10 years, 2 years, …)
  • Market segments (blue chips, mid caps, small caps, or tech, biotech, steel,…)
  • region (amerika, europa, asia, or even more specific only one country)
  • diffenrent kinds (equities, Exchange traded funds [etf], leveraged etf )

Futures

You can separate the Future market in the same manner as the equity market.

Forex

  • The forex market is nearly 24 hours open.
  • Do you want to daytrade the whole 24 hours?
  • Which timeframe do you want to trade?
  • Which currency pairs do you want to trade?
  • What leverage do you want?

Options

This market is broader than any of the others because you have for every underlying several strike prices and maturities.
Before you enter a trade you have to ask you some more questions than for the other markets. On the other hand it can be very rewarding.

Bonds

This is the biggest market. Here you find the institutional and the big players with a lot of money. This market works not very good for day trading and for numbers less than 10 million.

 

Risk for day trading strategies

As a rule of thumb: You should not risk more than 1 percent of your trading capital for each trade. Some people mention 2% or even 3%. For my opinion, this is far too much, because it blows your account away.

Let´s make an example:

Trading capital: 10,000 $
1% = 100 $

Don´t risk for each trade more than 100 $. For every trade you enter you have a stop loss at 100 $. Then you close the trade. You can do this at 100 times before the account is empty. If you risk 2% it is empty after 50 trades and if you risk 3% it is empty after 33 trades, really quickly. This does not consider the emotional stress. For more details to this crucial point look at another blog.

Furthermore you can look at different parameters regarding the risk

  • Total Net Profit
  • Profit Factor (Gross Profit / Gross loss)
  • Average Trade Net Profit
  • Average Winning Trade
  • Average Losing trade
  • Number winning trades / Number losing trades
  • Max Drawdown

Here you can see an example for a good day trading strategy for the Future market build with Tradestation.

DayTradingStrategy_Performance_TF_15Min

Weather this is a good day trading strategy that really works or not, you have to check a few more points. You can find this information in my free pdf How to read a Performance Report

 

After all, that is said one point remains:
There is no best day trading strategies that work in general. You have to specify what you want. Which day trading fits to your personal style?

For further information, check this out:

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