There are more opportunities in day trading than swing trading, especially in the Asian markets.
So how does a trader become a successful day trader? Here are some tips and day trading strategies to use in Asia.
Have a clear time frame
First of all, plan what will be executed during the whole day. The first thing to go into this plan is a clear time frame. What time frames should be used on these markets? This depends on the strategy being used, but generally, there are three different time frames.
- 1 minute – 5 Minute range; For scalping and short-term trades
- 15 minute – 30 Minute range; For medium-term trades
- Daily & Weekly range; To catch long term trends
Have an entry and exit level
The second point would have an entry-level and exit level. These levels should be decided before the day has started, this will ensure that nothing will be executed on some days, and on other days, all entries are hit.
Stick to the plan
Thirdly it is crucial to stick with the plan. If there is no entry on a particular day, move along to another strategy for that day. That does not mean trading has to stop; learning about different markets can also be done on non-trading days.
Day trading strategies
Trading is not known for its simplicity. The very nature of the market requires the investor to make decisions quickly and act on them before prices change. Day traders, who may hold positions for mere minutes at a time, need speed even more than other investors. Here are three examples of day trading strategies that may put an edge over rapidly changing prices.
The first strategy is known as “scalping.” A scalper looks for small prices that they can exploit for quick profits. For example, suppose one purchases shares of company X at $5 per share and sells them immediately when their price rises to $5.25 per share, making a 25 cent profit. In that case, this is considered scalping because no real value has changed in the underlying company. Day traders who employ this strategy tend to spend very little time on research, preferring the thrill of reacting quickly to changing prices.
Trying to profit strictly from daily moves in the market is called day trading. By definition, a day trader closes all their positions before the end of each day’s trading session. After closing out one position, they may be ready for another fast trade right away, or they might not enter into another trade until the following day.
Some traders prefer to sit back after closing out a profitable trade and wait for that same opportunity to repeat itself before entering into new trades. This method requires extensive knowledge of past price trends and even inside information about companies whose stocks are traded publicly if one hopes to hold out for a repeat of past successes.
The third strategy is known as swing trading, and it is suitable for both beginners and more seasoned investors alike. A swing trader looks for price movements that they would like to hold over days or weeks. For example, a swing trader may purchase a stock at $5 per share but wait until the price rises to $7 before selling it to turn their investment into a quick profit.
Swing traders spend time researching potential trades based on fundamental analysis, an approach that examines company reports and financial statements in addition to studying charts showing past patterns.
These three day trading strategies are by no means exhaustive; there are other approaches that one may take when entering this type of market. These ideas have been presented as ways to jump-start a viable trading strategy that will help one put the market’s rapid changes to work for them. Beginner traders are advised to use a reputable online broker from Saxo Bank and trade on a demo account before investing real money.