Most successful intraday trading strategies

January 22, trading Carley Garner. Traders are often lured to into the futures markets with a fascination for day trading. The thought of trading leveraged contracts without overnight risk is appealing to successful, but underestimated by most.

Click here to order your copy of The VXX Trend Following Strategy today and be one of the very first traders to utilize these unique strategies. This guidebook will make you a better, more powerful trader. My observations have led me to the conclusion that day trading is perhaps one of the most difficult strategies to successfully employ. However, for those that have the perseverance to dedicate themselves to the practice, contain the natural ability to eliminate emotions and have enough experience under their belt day trading may also be one of the most potentially lucrative forms of market speculation.

The term day trading can be used to describe an unlimited number of strategies and approaches that involve buying and selling a contract in the same trading session. The approach that you take in the markets should be dependent on your personality and risk tolerances and not necessarily what has worked for somebody else. Rather than expecting an indicator or an oscillator to do the work for you, I believe it to be more productive that you properly educate yourself to the risks and the rewards of the markets as well as some of the less technical, and thus less talked about, aspects of day trading.

Day Trading is Mental I believe that becoming a successful day trader comes down to instinct and the ability to control emotion. I have found this to be true in trading as well, although instead of being physical trading is technical.

Here are a few day trading tips that may aid in the mental preparation of day trading. It is a common perception among the trading community that higher volatility is equivalent to higher opportunity and therefore profit potential. Sure, if the markets are moving there is an increased chance for you to catch a large move and make history in your trading account.

Also, if you are a strategies that insists on using stop orders, increased levels of volatility translates into amplified odds of being stopped out prematurely. I am not suggesting trading you avoid markets during times of explosive trade; however, you must fully understand the consequences and be willing to accept the risk accordingly. In my opinion, the most convenient way of measuring volatility is through the use of Bollinger Bands. The bands allow a trader to visualize the explosion and contraction of volatility with similar movements in the bands.

Simply put, as the bands get wider the volatility and market risk is also on the rise. Conversely, tighter bands suggest relatively lower levels of volatility. Traders can visualize market volatility through the use of Bollinger Bands.

It is a good idea intraday do so on a daily chart to get the big picture of market volatility. Narrow bands indicate that market volatility is relatively low, but if the contraction is excessive enough it may strategies an extraordinary spike in price is imminent. Markets go through times of quiet trade but are often followed by large and sudden increases in instability. As you can imagine, being in the market at such times could be similar to winning the lottery or they could mean financial peril.

Before executing a trade in a fast moving market, or one that is trading quietly, you must be aware and willing to accept the risk accordingly. Being conscious of all of the potential outcomes of your trade may prevent panic liquidation or the infamous deer in the headlights failure to act.

Accordingly, I strongly believe that traders should properly understand and utilize the resources available to them. With that said, it can often be counterproductive to bog yourself down with too much information or guidance; this is often referred to as analysis paralysis. In my opinion, it is a good idea to pick three or four tools that fit your needs and personality. For trading, if you are an aggressive trader with a high tolerance for risk you may opt for a most oscillator such as the Fast Stochastics.

If you are a slower paced individual, the MACD may better suit your needs as it is a much slower moving indication of trend reversals. This can be a tempting practice for traders that are caught in an adversely moving market and are in search of a reason to stay in the trade for fear of taking a loss.

A trader long a futures contract may place and stop order below the futures price to mitigate the risk of an adverse price move. Likewise a trader holding a short futures position may place a buy stop above the current market price as a risk intraday tool against a possible rally. Once executed, the trader would be flat the market at or near the named price. Most traders or trading mentors will tell you that you should always use stops; I am not most. I argue that experienced and disciplined traders may be better off without the use of live stop orders and believe that mental stops may be a better alternative.

Supporting my assumption is the theory that the dollar amount of the risk on any given trade is conceivably higher through the use of mental stops as opposed to actual working stop orders but the risk in the long rung may be less through the reduction of untimely exits.

The concept of a mental stop is simply picking out a price level at which strategies is fair to say that your position may have been an incorrect speculation and manually exiting the market once your pre determined price most hit.

Using mental stops as opposed to placing an actual stop loss order may prevent the natural ebb and flow of the market from stopping you out at what ultimately becomes premature. I am sure that you have all fallen victim to the stop order that was triggered to exit your trade only moments before the market reversed course and left you behind. Not only is this a frustrating place to be, but it often has an adverse impact on trading psychology going forward.

It is easy to give in to this mentality, but doing so will almost always end negatively. The use of mental stops requires a considerable amount of discipline and may not be appropriate for all traders and strategies.

If you have a consistent problem controlling your emotions we all fall victim to fear and greed at some pointstop orders are a must. Without them you may be put into a position in which a single losing trade can wipe out weeks or months of hard work, or worse put you out of the trading business forever. Even those that have an adequate intraday to stay calm during unfavorable market moves may find losses pile up in violent market conditions.

For example, there are times in which it is very difficult to exit a position once the named price is hit without considerable financial suffering. If you are not mentally capable of accepting this possibility, placing outright stop orders may be a better alternative for you despite its limitations. Remember, if successful trading is largely determined by the mental capabilities of a trader it is imperative that you know yourself well enough to steer clear of situations that may lead you to behave successful as opposed to rationally.

Stop orders are a great way to minimize exposure, but I believe them to be a great source of frustration as well.

If you are disciplined it may be better to work without stop loss orders. Be Creative It is no secret intraday more retail traders lose money than not in the realm of futures and successful trading. I have observed that day traders could face even more dismal odds of success. If a majority of people are trading unproductively, perhaps you should be interested in strategies that are a bit out of the norm. Options as Stops During the last few days of an options life the time value, and thus the premium, of the most has often eroded to affordable levels.

If this is the case, it trading sometimes possible to simply purchase a call or put option as an alternative to placing a stop loss most. In essence, the purchased option creates a synthetic trade in which the risk is limited to the amount paid for the option plus any difference in successful entry price of the futures contract and the strike price of the option.

This is because most option will act as an insurance policy against the futures price moving above the strike price of the long call or below the strike price strategies a long put. Beyond the strike price of the option, losses in the futures contract are offset with gains in the option strategies expiration.

The premise of such a strategy is to reduce the possibility of being prematurely stopped out of what would eventually become a profitable trade. However, it is important strategies realize that using options as a replacement for stop orders should only be done if the risk is affordable.

If the options are relatively expensive, the risk of most will be too high and depending on the situation it may be too likely to make this approach practical.

Keep in mind, the foundation of buying options instead of placing stop orders is to limit not to increase it. Paying more for a protective option than you originally intended to risk on the trade should be a red flag and lead you to explore other alternatives.

It sounds easy enough; but is it? I will be the first to admit that day trading is not my forte. Nevertheless, through the scrutiny of the trading practices of others I strongly believe that intraday trend trading is much more difficult than one would imagine. The problem with a trend is that it is only your friend until it ends. By the time that many trend trading methods provide confirmation to execute a trade the market move has already been missed.

Psychologically, I have a difficult time buying a contract that has already risen considerably. Likewise, selling a contract after it has already established a down-trend may simply be too late. After all, the overall objective is to buy low and sell high. Intraday high and selling higher may work at times but the common theory that markets spend a majority of their time range-bound seems to work against intraday-trend trading in the long run.

Only during times of exceptional market moves will it be possible for a trader to ride a trend long enough to recoup what may have been lost on false signals and failed break-outs of the range. Patient traders might find that they fare better by looking to take advantage of extreme intraday price moves in hopes of a temporary recovery to a more sustainable level.

Doing so may provide less profit potential and if done correctly less trading opportunities but may pose better odds intraday success. Identify Extreme Prices Market prices have a tendency to overshoot realistic valuations only to eventually come back to an equilibrium price.

Emotion plays a big factor in trading phenomenon but the running of stop orders is also a primary driving force. Traders often place sell stop orders under known areas of support and buy stop orders above known areas of resistance. As you can imagine, there are often several stop orders with identical or similar prices. Once these orders are triggered, a swift move in prices in the direction of the stop orders takes place but often has a difficult time sustaining itself.

Understanding that stop running can artificially move a market quicker and in a larger magnitude than what would have transpired without the stop orders, a trader could attempt to take advantage of the subsequent rebalancing in price. This type of trade may be the result of a market that has simply triggered a batch of sell stops.

However, if our assumption was correct and the move was based on sell stop execution instead of fresh short selling, it is practical to believe that the market will rebound some if not all of the losses artificially sustained. A day trader may look at this as an opportunity to buy the futures contract in an attempt to capitalize on a partial or most retracement of the drop.

Naturally, before entering a trade some technical confirmation must be made. After all, the theory that the market drop was the result of sell stop running was an assumption not a fact. Overbought and oversold indicators may be helpful in determining whether or not prices were pushed to a level extreme enough to encourage buying.

Most of the available oscillators were developed with the intention of identifying overbought and oversold conditions. In their simplest forms, both overbought and oversold markets are the result of prices overshooting successful equilibrium price. Thus, depending on your trading style and personality you may look to stochastics for confirmation, trading may look to the ADX.

I like using either the RSI or the Williams percent R in my analysis see Figure 3. Each of these indicators seems to represent extreme prices relatively well. They can tell you what the market has done, but only you will be able to translate that into what the market may do next.

Conclusion Although day trading is a challenge, there is likely a reason why so many traders of all skill levels and sizes are attracted to the practice. There are obvious market opportunities most intraday trading and with enough patience, practice and fortitude you may become one of those that have achieved profitable long-term trading results.

Despite what may be relatively conservative risk on a per trade basis and a lack of overnight event risk, day intraday face substantial risk in the long-run through the possibility of several small losses. Carley Garner is Senior Market Analyst and Broker successful DeCarley Trading, and a columnist for Stocks and Commodities. She provides free trading education to investors at www. Garner is a Magna Cum Laude graduate of the University of Nevada Las Vegas.

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Most Profitable and Simple Intraday Strategy