March 21, 2018

Three Key Elements of Profitable Daytrading Strategies

Three Key Elements of Profitable Daytrading Strategies

Trading the financial market and making a consistent profit out of it is extremely hard without proper planning. People who are successfully trading the financial market have a valid trading strategy with a stable psychology. Professional day traders tend to have different trading strategies yet all of them shares the three key ingredients which made their system profitable.

Three Key Elements

  1. Money management
  2. Simplicity
  3. Trading the raw price data

Chart Example:  Fibonacci Fans


Figure: Simple and perfect day trading strategy with Fibonacci fan

In the above figure, traders draw the Fibonacci retracement level from the swing low to swing high. Professional day traders went long in the 61.8% fibo level with price action confirmation signal with a risk reward ratio of 1:3.The pair broke the 61.8 % Fibonacci level just after hitting the take profit area and again retraced back to the 61.8% fibo level. Professional day traders use pending sell order in such type retraces entry.

They exactly knew that the uptrend has capped with the break of 61.8% fibo level so they act accordingly. In most of the case, risk reward ratio is extremely high when day traders enter into a new trade. The second entry in the above chart had a 1:5 risk-reward ratio. To be precise, professional traders trade what they see not what they believe. They understand the fact that success lies behind the simplicity of trading the raw price data.


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