Perfect Day Trading strategies Set-up :
If you are doing trading , To make money you have to do PRICE FORCASTING
There are 3 way’s of Price Forcasting :
In Fundamental analysis , You have to study factors like companies balance sheet , Profit and loss statement , Industries scenarios , Govt. Policies , world’s economic factors . Fundamental analysis is beneficial for long term investor.
In technical analysis , you have to study price charts and using technical concepts like Price patterns , support / resistance levels , Indicators you can make short term price forcasting.
Psychological analysis is very advance concept of price forcasting , It need in-depth knowledge about market and about yourself.
If you are day trader , then only option remains with you is Technical analysis.
To make CONSISTENT income from day trading , you need PROFESSIONAL Intra Day Trading strategy based technical analysis concepts.
Components of Day trading strategies :
1. Stock Selection : There are few thousands of stocks available for trading at exchange. It’s not possible to monitor each and every stock , So you need specific criteria for stock selection for day trading.
2.Entry Rule : Once you selected stock for day trading ,
then you should know :
2.1 where to enter? : means at what price
2.2 when to enter ?
2.3 How to enter ? : Limit order OR Market order
3.Exit Rule : After selection of stock , once you enter in market , you need criteria (Specific rule) for exit from market.
There are two types of exit :
3.1 Profit Exit :
Book full profit or partial profit
Trailing Stop for profit
3.2 Stop loss Exit
4.Money management :
It is simply quantity calculations. Most of novice traders has habit to enter in each and every trade with fixed quantity. But it is not professional approach. You need to calculate quantity separately for each and every trade. To know about Money Management kindly read : How FII / Big players do Money Management ?
Once you have all these components in its place , it doesn’t mean that you should start trading immediately.
You have to go for :
1.Profitability Check :
Once you decide above mention rules for your trading strategy , then before going for actual trading on your hard earned money you should have to check :
a)whether this trading strategy is really profitable or not?
b) what is success rate of this trading strategy?
c) what is average drawdown period and percentage for this particular trading strategy?
d)How many consecutive profit and loss trade this strategy might have?
2.Practicability Check :
Practicability check means , after getting signal from your Technical analysis based trading strategy ,
a) You should get sufficient time to place your order
b) Your order should get executed in market.
Even though your trading strategy is profitable but it is not practical: means you are not getting sufficient time to punch your order or your quantity is not getting executed then that strategy is not useful for you.
To know more about this kindly read : PROFESSIONAL Intra Day Trading strategies.