Hello there, Lee here from Trading College and in this article we’re going to talk about day trading the markets. I’m a day trader. I’m a swing trader. I’m primarily an investor but day trading is something that I like to do on a pretty regular basis. Personally I like to day trade the markets in the morning session which then frees up my time in the afternoon to do other things. Now it’s important to note that whilst day trading can be very financially rewarding (if done properly) it can also be quite the challenge for those just starting out – especially if you aren’t fully prepared with the right strategy.
What Is Day Trading?
Ok, so you might be asking yourself, what exactly is day trading? What are you trying to do? Well, quite simply, when we’re day trading the markets we are using predominately smaller timeframes. Now remember, using the Pro-Trading System, the timeframe area is located on the bar at the top of the screen and by using that dropdown you can adjust the chart to display as low as the latest second right up to covering the whole of the last year.
Your own individual preference might be a little different or even change over time but I would always recommend that a good starting point for day trading is to use either the 5 or 15 minute timeframes. Now as good as these are, you cannot use these short-term displays as the only basis to inform your decisions. I cannot stress enough that you also need to be using the bigger timeframes as well. Why? Because even when day trading, you want to be making those deals on the right side of trends.
Looking At The Bigger Picture – Identifying Market Trends
Now we’ve covered this topic many times before and if you’d like to learn a bit more about this in detail, there are plenty of free trading videos and a few very useful articles elsewhere on the website. However, to quickly recap, over the course of the day as the trends on the chart go higher it makes for higher highs and higher lows.
So if you adjust the timeframe dropdown to display at, say, the daily or the four hour level, you can identify and, more importantly, trade on the right side of the actual bigger timeframe trend. In that case, you’re then going to make money much easier because the flow, the price and the pressure is to the long side.
If I start doing short trades for instance, when the bigger trend is up, then I’m swimming against the tide and it’s going to be tougher to make money. This doesn’t mean it’s impossible but generally you’re not going to make lots of money doing it this way. Also, throughout that term of countertrend trade, as we call it, you will be finding things a little bit tougher.
Spotting Windows Of Opportunity In Day Trading
Okay. So some really good advice is to trade with the daily timeframe or the four hour trends. Now there’s always a window of opportunity in the morning session. From around 6 to 10 o’clock, there is that European session, that London session where the Forex market, the FTSE and the DAX really come alive; the exchange is open and everyone is at their screens trading. However, they’re not necessarily going to be trading at 5:00pm that evening.
So this window of opportunity where we’ve got the Asian sessions effectively coming to a close and we’ve got the European session starting up is really key. If you’re based in the UK, you’ll know that we’re stuck right in the middle of the New York and the Asian sessions. Which is great; perfect in fact. That’s what we want. We need the market to move in order to make money.
Day Trading For Your Day’s Money
So if the market can move, we can go for our day’s money. What is your day’s money? Well, that’s for you to decide for yourself, but you want to be looking for a figure that can match what you’d be earning for the day in your job.
To be clear, I’m not saying you want to quit your job and replace it with day trading. I’m just saying, set a daily target for yourself. Could be 50 pounds; could be 500 pounds. It’s going to be unique to your own set of circumstances. In any case, I’d want to go and get a day’s money early in the morning. I’d want to go for profits and get the day’s money so that i can then go and enjoy some leisure time.
This is great in the winter because I don’t have to commute to work in the freezing rain or trying to avoid the ice. However it’s also great in the summer because I can go and play a round of golf in the afternoon or pick up the kids from school and spend some quality time with them. So this early window of opportunity is called the morning move, where the European market comes alive, and it’s something that we want to take advantage of.
Using The Storyteller Screener In Day Trading
So that’s the concept. We want to get those big moves. We want to go for moves that have volume; more volume in these moves in a single direction will push the price up and this means that there is even more profit potential. So on the Pro-Trading System, we use the storyteller indicator, which is the chart located at the very bottom of the screen. We‘d run the storyteller screener for day trades in the morning because this will give us the signal with the chart’s histograms.
If the histograms are pointing up from a red color, which has no momentum, and suddenly we get light green momentum, it’s going to flag up on our screener. This means that there’s no need to waste time and go hunting for markets. However, I would stick to either the GBP/USD, the EUR/USD or the USD/JPY to start with because you don’t want to miss out on some of these moves. If you miss moves then you’re gonna lose confidence, you’ll start to get frustrated and we don’t want you to do that. Instead, stick to two or three pairs; then get the scanners working for you nicely and you can trade anything. Absolutely anything. So long as you know what to do.
Don’t Overcomplicate Day Trading
So what we really want to do is keep it simple. We’ve got to be quicker in the morning because we’re not taking our time. It’s not swing trading so firstly, we need to be focused; that means no phones. They need to be turned off or put on silent. We need the office door closed. We need to concentrate and we need to trade with the trend.
What do I mean by trade with the trend? Well, as I touched on earlier, if the bigger timeframe is trending up that means higher highs and higher lows. So if the daily or the four hour timeframe is up, we want to be looking for longs and green candlesticks PTS in the morning session. We want to be avoiding the reds; we want to be looking for what we call green on green. Once you’ve indentified these lovely green pro trend systems with the momentum trigger firing higher what you’re seeing are some really good windows of opportunity to maximise your return.
In these instances, I don’t want to be short in the market; I want to be getting long. So getting long means that I can look for Pro-Trading System buyers. I can look for storyteller greens and I can get long with these moves.
Day Trading Can Work Around Your Schedule
Now, when day trading is done correctly, I know that I can make my day’s money early and then go have fun. However, I also know that most people have got jobs to go to so this window of opportunity, quite early in the morning, can easily be utilised before heading off to work. If you are indeed trading full-time, then you should stop trading from around 10:30am because we have to consider the bankers’ reversal time and the markets tend to get pretty choppy from your level so I would recommend that you have a rest and (if you don’t want to call it quits for the day) then come back at about 1:30pm, when the New York session really gets into flow, and you can trade at those sessions if you want. You could even try trading in the morning, hold some of those trades for later on and then manage those whilst out and about on your mobile phone; which is something I often do myself.
So we definitely like to use trends in day trading. Some advanced traders might want to do some countertrend trading but predominantly we want to be buying green on green. We want tighter stops and we want to be managing those trades much quicker than if we were swing trading the markets; where we can sit down with a cup of tea in the evening, to time and place those trades.
Remember those timeframes. We want to look for green daily, green four hours and then green five or green fifteen. Place the trade using the system and away we go! We can get that day’s money nice and early in the morning using the scanner.
If day trading sounds interesting to you, then please remember to check out our Learn To Trade Online 2021 Masterclass. It’s a one day training course where we’ll be covering day trading, swing trading and what you need to become a trader with much greater precision. Due to COVID they are currently held online but we also go all over the country so please check out when the next available dates are and I look forward to seeing you, either over the webcam or in the flesh.
At Trading College we believe in a systematic and discretionary approach. We cater to both kinds of traders with our strategies that can be mixed to create great trading results. In this article, we will have a look at the pros and cons of both trading styles and...
What is Risk vs Reward in Financial Trading? Risk to reward is the relationship between the amount you are willing to risk on a trade and the amount of profit you hope to make. It is a gauge of the potential profit (reward) of a trade compared to the potential loss...
WHAT IS SWING TRADING? Swing trading is one of the most popular forms of actively trading the markets; particularly amongst traders using technical analysis. Unlike the intraday trades placed when you Day Trade, Swing Trading is a trading style that tries to make...