Day Trading Strategy

Strategy, Planning, Discipline and Style of Execution are often the parameters that determine the success of any operation, be it your daily tasks or trading. So, before you embark on this journey as a trader, here are few key pointers in trading strategy that will aid you at all times:

Price Action – Reading price movement bar-by-bar, direction or movement, acceptance or rejection at levels (Support/resistance, Decision points).

Levels – The best trades happen around levels that get created due to institutional activity. It’s very important to understand the market structure. Few things that would help are:

  1. Support & Resistance
  2. Swing High/Low(SH/SL), Higher High/Low(HH/HL), Lower High/Low(LH/LL). My entries are based on this
  3.  Decision Point(DP) trading system is about levels created by institutions, which help a day trader to make informed decisions. Though the DP system covers a lot of aspects, below is what I use for analysis.
  • IRH – Initial Range High
  • IRL – Initial Range Low
  • PDH – Previous Day High
  • PDL – Previous Day Low
  • PDC – Previous Day Close
  • BRN – Big round nos

There are additions here like

  • Intraday High
  • Intraday Low

Price action around these levels are used for analysis.

Additional terms used are

  • SPB – Simple Pullback
  • CPB – Complex Pullback

Indicators – I trade price action but prefer to have few indicators as well.

  1. RSI
  2. ADX/+DI & -DI

Anything that gives an edge in trading I try to utilize it. I use indicators for confirmation, rather than decision making for trades.

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