Incorporating Confluence In Your Trading Strategy For Enhanced Profits – Day trading is a popular trading style because of its fast trading method and abundance of trading opportunities. However, finding the right trading strategy can be a difficult task because there are countless day trading strategies that an aspiring day trader will find by searching the internet or through trading books. Without proper guidance, a day trader can find himself system-hopping, missing important trading rules, and not achieving stability in his trading. In this article, we’re going to explore six different day trading strategies where each method is broken down with step-by-step chart examples, supported by detailed trading explanations, and offers an in-depth walkthrough of strategic application. Fakeout , Trap , and Liquidity Grab We are introducing a simple, yet effective day trading strategy that also uses a multi-time frame approach. A multi-time frame approach in which a trader uses a higher time frame to determine overall trend direction and look for key price structures can result in strength and day trading strategies. Let’s start with the first screenshot that was taken on a higher time frame, in this case, the daily time frame. The downtrend that started to the left seems to have ended, which means that the price was not able to move up yet. The black horizontal line marks the minimum of the downtrend. We use this as a reference point for further price analysis and we want to see how the price reacts when it reaches the next time. The price formed a daily pinbar at the last swing low, which is a strong rejection signal. In trading, this is called a false breakout because it may initially look like a breakout below the last low, but the price was unable to close below the level and went higher. There was not enough selling interest in the market to push the price below the last low point. Other traders may refer to this as a liquidity spike or liquidity grab. This is because you can expect other traders to place their stop loss or breakout limit short orders below the support level. When there are not enough sell orders at or around the level, the price cannot go lower and therefore, reverse. A false exit, or liquidity spike, is a bullish signal. This indicates that there may be a higher chance that the price may rise further, away from the failed breakout attempt. With the bullish signal in mind, traders then move to shorter time frames. For a day trading strategy, traders usually go for a 5 minute or 15 minute time frame. In this example, we are now taking a look at the 5-minute time frame to find fast trading opportunities. As a day trader, you don’t just buy blind after identifying the market after spotting bullish signals on higher time frames, but you also look for short-term bullish trading signals on lower time frames. at the. The reason for this is that such an approach allows day traders to adapt their trading idea on a shorter time frame, obtain a more accurate entry point, and therefore, improve the reward: their trade. The risk ratio. In this scenario, the chart shows a broad bullish head and shoulders pattern. The blue horizontal resistance level allows day traders to plan their trading plan around this structure. For a bullish trading signal, traders usually wait for the price to close completely above the blue resistance zone. Since the blue resistance zone has repeatedly caused the price to lower, exhibiting bearish selling interest on the zone, traders can wait for the price to get above this zone before entering a buy trade. The next screenshot shows the full bullish breakout above the black horizontal resistance zone. This is the last bullish signal that day traders have been waiting for. When creating your trading plan, day traders usually look to large historical price levels. In the chart example below, a trader may choose to place a target order below the recent high as indicated by the black horizontal arrow. There may be a higher chance for the price to reverse the previous high and therefore, exiting before the high can improve the chances of realizing a profitable trade. The next screenshot shows the final result. The price finally made it through the final target level. However, the price became extremely volatile between entry and exit. Looking closer, a trader can use a more conservative targeting strategy by first targeting the top of resistance, marked by the down arrow. A closer target is, in theory, an easier price to reach and, therefore, can have a higher win rate. For traders who are struggling with the long term, a close target strategy may be better. Daily High-Low Trend-Following Multi-day trading strategies use the concept of “daily high and low” which means looking at the high and low of yesterday’s price action. In Tradingview, there is a freely available indicator that plots the high and low action of yesterday’s price on your charts. I made a YouTube video explaining this here: https://youtu.be/bqzdNO2N24I?t=9 One way to use the concept of daily highs and lows is within a trend-next day trading strategy. In the example below, the green channel looks at the high of yesterday’s price action. What we can see is that the price has recently pushed into the green channel and has not moved into the red channel (yesterday’s low). This indicates an overall bullish market. Therefore, looking for fast trading signals may provide the best opportunities. A potential idea is to follow the entry for a day trading trend to wait for a clear breakout above the green yesterday’s high. This may suggest a continuation of a bullish trend. In the screenshot below, this is what happened. The price broke the daily high with strong momentum, providing an entry opportunity. You want to be wary of a stronger than normal selling green at yesterday’s highs. Since many traders use the daily for target placement, price sometimes reacts strongly to the level. In this case, the price reacted to the low at first and then broke the level with large candles. Such price behavior can confirm the lack of selling interest (more traders not taking too much profit) and therefore, points to more buying in long-term growth. The stop loss, in such cases, is usually placed below the daily high. Trading in daily highs is a trend-next day trading strategy. Therefore, traders may choose to increase their targets to catch potentially big winning trades because the price tends to move higher during trending markets. Daily Open and Session Velocity Especially in forex or stock trading, many day trading strategies incorporate sessions into their trading rules. The idea is that there may be a large—normal momentum—or an abnormal level at, or around, the opening time of a trading session. In Tradingview, there are several freely available indicators that plot different trading sessions directly on your chart. In the example below, the UK trading session has started, indicated by the green background color. We are looking at the EUR/USD chart which has its most active price behavior during the UK session. Therefore, looking for trading opportunities during the UK session can provide better trading opportunities. What we can see is that the price has moved up overall and the price has moved from the bottom left side of the chart to the top right side. A bullish trend emerged during the yellow Asian session. Therefore, trading signals during the UK session can look for trend-following opportunities in relation to ongoing trends. For a bullish continuation, traders usually wait for the price to break into a new high – marked by the black horizontal line below. A long trade below a high may provide less favorable trading opportunities. A bullish trend following signal is given when the price breaks into a new high. The breakout took place within the first hour of the US session, using the opening momentum theory of the session. Aggressive day traders can place their stop loss below the breakout level. If you want a bit more security, placing a stop loss below the last swing can also be an option. In this instance, the bullish trend developed during the early hours of the UK session. Many traders prefer to exit their active trades before 12 pm lunch time in the UK as they believe that trading activity is significantly reduced during that time. This can be a great starting point for your backend to learn more about the price behavior of your chosen markets during different daily session times. Supply and Demand Zone Trading Supply and demand trading concepts are commonly used in many different trading strategies. They complement traditional support and resistance trading as well. supply
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