Day trading is based on opening short-term transactions during a day. It is often seen as riskier than traditional forms of investing. You need to catch the right moment to take advantage of the changing situation in the market. There are, however, some techniques that can improve your day trading results.
3 simple tricks to enhance your day trading
Examine various timeframes
In order to open a trading position, you must analyse the market to identify the best moment to enter. You trade on a certain timeframe. Nevertheless, if you change the chart timeframe to a different one, you may discover something more. Sometimes, a bigger timeframe will help, sometimes a smaller one. It can serve as confirmation for the trend you have identified or finding a trading opportunity that was invisible on another timeframe.
You may have more than one chart open with the same instrument, only with different timeframes. You will be able to easily switch between them to search for extra information about the asset’s price.
Use chart patterns
There exist repeatable patterns on the price chart. It is wise to use them in technical analysis as they indicate crucial phases of the market. We can distinguish continuation patterns that give information that the current trend will most probably continue and reversal ones that predict an upcoming change of the direction of the price.
Remember to use additional tools to confirm trading signals obtained from the chart patterns.
Modify indicators settings
Indicators come with default settings. Usually, they work very well with them. Nonetheless, it might be a good idea to play with the settings. The different market situation requires a different approach and when you adjust the parameters you may get better results.
Generally, when you lower the settings, an indicator becomes more sensitive. Larger settings make it less sensitive and the signals received can be more adequate, though, this is never guaranteed. On the downside, larger settings lead to a greater lag of the indicator.
You have to try different settings to see for yourself how the indicator behaves with them. With time and practice, you will be able to find a balance so the indicator will respond to your needs.
In day trading you have to act fast. It demands you open short term transactions and they would have more profit potential if you entered at the very precise moment. Naturally, every trading decision should be preceded by deep market analysis. You have to estimate risk and not take each opportunity you spot on the chart. This is why it is so important you start every session with a trading plan prepared and thought well through. It will help you to avoid ill-advised decisions and to become calm in difficult times.
Day trading can bring you profit when you know what you are doing. It is quite distinct from investing more traditionally and you need to use different techniques. Consider analysing different timeframes, using chart patterns and changing the indicators parameters. Have your trading plan in hand and act fast.
Olymp Trade has a free demo account in its offer. Remember about it when you want to test a new approach. There you can check how the indicator works with different settings or how various timeframes give different signals.
Prepare yourself well before you invest real money.
Wish you high profits!
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