Spread trading This high-speed technique tries to profit on temporary changes in sentiment, exploiting the difference in the bid-ask price for a stock, also called a spread. For example, if a buyer’s bid price drops suddenly, the day trader might step in to buy and then try to quickly resell at the stock’s ask price or higher, earning a small “spread” on the transaction.
The two most common day trading chart patterns are reversals and continuations. Whilst the former indicates a trend will reverse once completed, the latter suggests the trend will continue to rise. Understanding these trading patterns, as well as ‘triangles’, ‘head and shoulders’, ‘cup and handle’, ‘wedges’ and plenty more, will all make you better informed when it comes to employing your trading strategies.

There is no special qualification required to become a day trader. Instead day traders are classified based on the frequency of their trading. FINRA and NYSE classify day traders based on whether he or she trades four or more times during a five-day span, provided the number of day trades is more than 6% of the customer's total trading activity during that period or the brokerage/investment firm where he or she has opened an account considers him a day trader. Day traders are subject to capital and margin maintenance requirements.


Day traders use only risk capital which they can afford to lose. Not only does this protect them from financial ruin, but it also helps eliminate emotion from their trading. A large amount of capital is often necessary to capitalize effectively on intraday price movements. Having access to a margin account is also key, since volatile swings can incur margin calls on short notice.
When it comes time to take profits, the swing trader will want to exit the trade as close as possible to the upper or lower channel line without being overly precise, which may cause the risk of missing the best opportunity. In a strong market when a stock is exhibiting a strong directional trend, traders can wait for the channel line to be reached before taking their profit, but in a weaker market, they may take their profits before the line is hit (in the event that the direction changes and the line does not get hit on that particular swing). 

With over 50+ years of combined trading experience, Trading Strategy Guides offers trading guides and resources to educate traders in all walks of life and motivations. We specialize in teaching traders of all skill levels how to trade stocks, options, forex, cryptocurrencies, commodities, and more. We provide content for over 100,000+ active followers and over 2,500+ members. Our mission is to address the lack of good information for market traders and to simplify trading education by giving readers a detailed plan with step-by-step rules to follow. 


This article is going to go in-depth about a key swing trading technique on daily charts. While this may be considered advanced swing trading, this strategy is suitable for all investors. It is perfect for home study. We will tell you how to do proper technical analysis and show you when to enter the trade and when to exit the trade. We will do this by teaching you how to set the right profit target.
Price volatility and average day range are critical to a day trader. A security must have sufficient price movement for a day trader to achieve a profit. Volume and liquidity are also crucial because entering and exiting trades quickly is vital to capturing small profits per trade. Securities with a small daily range or light daily volume would not be of interest to a day trader.

Disclaimer: Trading carries a high level of risk, and may not be suitable for all investors. Before deciding to invest you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Make a plan to trade this strategy in a Simulated Trading account for 1 month to test your skills. Your objects will be to achieve a percentage of success (or accuracy) of at least 60%. You also must maintain a profit loss ratio of at least 1:1 (winners are equal size on average as losers). If you can achieve these statistics, then you are positioned well to trade live. During the 1 month of practice, try to take 6 trades per day.
With this best scalping system, you will find that it's not only easy to scalp, but also will find a high win percentage strategy and a chance to grow your account very quickly. If you are not a fan of scalping and enjoy swing trading or day trading strategies make sure you check out the Rabbit Trail Channel Strategy that will show you how to grab 50 pips at a time with a high probability of winning!
The first type of scalping is referred to as "market making," whereby a scalper tries to capitalize on the spread by simultaneously posting a bid and an offer for a specific stock. Obviously, this strategy can succeed only on mostly immobile stocks that trade big volumes without any real price changes. This kind of scalping is immensely hard to do successfully, as a trader must compete with market makers for the shares on both bids and offers. Also, the profit is so small that any stock movement against the trader's position warrants a loss exceeding his or her original profit target.
You have to see for yourself whether the pros outweigh the cons, and vice-versa. Technological resources can also enhance your trading. To expedite your order placement, with Admiral Markets, you can access an enhanced version of the 1-click trading terminal via MetaTrader 4 Supreme Edition. If you are interested in other strategies, you can check out our Best Forex Trading Strategies That Work article.
When you start day trading you’ll have a host of difficult decisions to make. Should you be using Robinhood? What about day trading on Coinbase? Do you have the right desk setup? Where can you find an excel template? How do you set up a watch list? The meaning of all these questions and much more is explained in detail across the comprehensive pages on this website.
Many swing traders assess trades on a risk/reward basis. By analyzing the chart of an asset they determine where they will enter, where they will place a stop loss, and then anticipate where they can get out with a profit. If they are risking $1 per share on a setup that could reasonably produce a $3 gain, that is a favorable risk/reward. On the other hand, risking $1 to make $1 or only make $0.75 isn't as favorable.

Risk management - Rather than looking for one big trade, the way a trend trader might, the scalper looks for hundreds of small profits throughout the day. In this process the scalper might also take hundreds of small losses during the same time period. For this reason a scalper must have very strict risk management never allowing a loss to accumulate.


Day trading poses a number of hurdles. Mainly, each trading day is slightly different. Traders need a method that works in nearly all market conditions. That doesn't mean a day trader will win every day. On the contrary, even with a great method, there still may be several losing days a month. Winning every trade or every day isn't important, it is winning over the course of each week and month that matters.
Spot foreign exchange (exchanges of foreign currencies) brokers - They do not charge any commissions because they make profits from the bid/ask spread quotes. On July 10, 2006, the exchange rate between Euro and United States dollar is 1.2733 at 15:45. The internal (inter-bank dealers) bid/ask price is 1.2732-5/1.2733-5. However the foreign exchange brokers or middlemen will not offer the same competitive prices to their clients. Instead they provide their own version of bid and ask quotes, say 1.2731/1.2734, of which their commissions are already "hidden" in it. More competitive brokers do not charge more than 2 pips spread on a currency where the interbank market has a 1 pip spread, and some offer better than this by quoting prices in fractional pips.
To succeed as a day trader, it is important to know how to pick stocks for intraday trading. Often people are unable to make profits because they fail to select appropriate stocks to trade during the day. Choosing the right stocks to book profits is an art that you will learn with experience. For beginners, here get some tips to choose stocks for intraday trading.
Swing traders should select their candidates from the most actively traded stocks and ETFs that show a tendency to swing within broad well-defined channels. Virtually all trading platforms provide a function to enter channel lines on a price chart. The trader should keep a list of stocks and ETFs to monitor on a daily basis and become familiar with the price action of their selected candidates.
But there is an added risk with the shorter time frame. A wide spread between the bid, the ask and commissions can eat too large a portion of your profits. Swing traders can struggle with this too, but the effect is amplified for the day trader. Day traders can find themselves doing all the work, and the market makers and brokers reap the benefits.

But there is an added risk with the shorter time frame. A wide spread between the bid, the ask and commissions can eat too large a portion of your profits. Swing traders can struggle with this too, but the effect is amplified for the day trader. Day traders can find themselves doing all the work, and the market makers and brokers reap the benefits.


By holding overnight, the swing trader incurs the unpredictability of overnight risk such as gaps up or down against the position. By taking on the overnight risk, swing trades are usually done with a smaller position size compared to day trading (assuming the two traders have similarly sized accounts). Day traders typically utilize larger position sizes and may use day trading margin of 25%.

In March 2000, this bubble burst, and a large number of less-experienced day traders began to lose money as fast, or faster, than they had made during the buying frenzy. The NASDAQ crashed from 5000 back to 1200; many of the less-experienced traders went broke, although obviously it was possible to have made a fortune during that time by short selling or playing on volatility.[9][10]
Scalping utilizes larger position sizes for smaller price gains in the smallest period of holding time. It is performed intraday. The main goal is to buy or sell a number of shares at the bid — or ask — price and then quickly sell them a few cents higher or lower for a profit. The holding times can vary from seconds to minutes, and in some cases up to several hours. The position is closed before the end of the total market trading session, which can extend to 8 p.m. EST.
A basic EMA crossover system can be used by focusing on the nine-, 13- and 50-period EMAs. A bullish crossover occurs when the price crosses above these moving averages after being below. This signifies that a reversal may be in the cards and that an uptrend may be beginning. When the nine-period EMA crosses above the 13-period EMA, it signals a long entry. However, the 13-period EMA has to be above the 50-period EMA or cross above it.
Traders following the Breakout Intraday Trading Strategy identify a price level which can be their breakout trading level, wait for a breakout and identify the resistance level and then wait for the break out to close above the resistance level. However, breakout trading is quite risky as the traders are buying the security that everyone else is, and there is hardly anyone left to buy it after the traders get in.
Trend Trading is a strategy where it is believed that a stock that is rising will continue to rise, or a stock that is falling will continue to fall. You enter the trade in the direction of the trend and exit once the price breaks this trend. Trend trading usually incorporates the use of trend and support/resistance lines. Click here for more information on Trend Trading.

A scalp trader can look to make money in a variety of ways. One method is to have a set profit target amount per trade. This profit target should be relative to the price of the security and can range between .%1 - .25%. Another method is to track stocks breaking out to new intra-day highs or lows and utilizing Level II to capture as much profit as possible. This method requires an enormous amount of concentration and flawless order execution. Lastly, some scalp traders will follow the news and trade upcoming or current events that can cause increased volatility in a stock.
Following the 1987 stock market crash, the SEC adopted "Order Handling Rules" which required market makers to publish their best bid and ask on the NASDAQ.[7] Another reform made was the "Small-order execution system", or "SOES", which required market makers to buy or sell, immediately, small orders (up to 1000 shares) at the market maker's listed bid or ask. The design of the system gave rise to arbitrage by a small group of traders known as the "SOES bandits", who made sizable profits buying and selling small orders to market makers by anticipating price moves before they were reflected in the published inside bid/ask prices. The SOES system ultimately led to trading facilitated by software instead of market makers via ECNs.[8]

Commissions for direct-access brokers are calculated based on volume. The more shares traded, the cheaper the commission. The average commission per trade is roughly $5 per round trip (getting in and out of a position). While a retail broker might charge $7 or more per trade regardless of the trade size, a typical direct-access broker may charge anywhere from $0.01 to $0.0002 per share traded (from $10 down to $.20 per 1000 shares), or $0.25 per futures contract. A scalper can cover such costs with even a minimal gain.

Day traders use only risk capital which they can afford to lose. Not only does this protect them from financial ruin, but it also helps eliminate emotion from their trading. A large amount of capital is often necessary to capitalize effectively on intraday price movements. Having access to a margin account is also key, since volatile swings can incur margin calls on short notice.
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