Best Day Trading Strategies for Australian Traders

Day trading

Day trading is indeed entertaining and exciting at the same time, challenging especially in an Australian stock market’s dynamic environment. All factors involved here, such as volatility in markets, various economic indicators, and specific trading styles must be taken into consideration by an effective strategy for a day trader. The following are the best day trading strategies for Australian traders:

Scalping

Scalping is a procedure in which one earns small profits from many transactions within the day. Traditionally, the holding period of traders is for a few seconds or minutes. In order to carry out scalping effectively, a trader has to target liquid stocks with tight spreads to enable easy and quick entry and exit. Technical analysis with indicators can be used for short-term price movements, namely moving averages and RSI. Trading during peak hours may even maximize profit.

Momentum trading

Momentum trading attempts to find those stocks whose price movements have been trending very strongly in one direction. Trends can best be identified with trendlines and moving averages. Fluctuating with increased trading volumes will confirm whether momentum really exists or not; besides, news releases often come with the influence of price on stocks.

Breakout trading

Breakout trading means entering a trade when the price breaks through significant support or resistance levels. Technical analysis can be used to find out these levels, but make sure it is confirmed by increased volume. Set your stop-loss to ensure proper risk management.

Reversal trading

Reversal trading refers to the profit reaped from a market through such price reversals at the so-called key support or resistance levels. Oscillators like the RSI help detect overbought or oversold conditions, as well as divergence between price action and the indicator readings. Enter a trade only after you get confirming candlestick patterns.

Pair trading

Pair trading involves the simultaneous trading of two correlated stocks so that profit can be realized from the price differences of the two stocks. Identify related or correlated stocks and monitor the price relationship between them; hence, one will be able to set a well-defined profit target and stop-loss based on historical price ratios.

News trading

News trading refers to trade whose basis is news events and economic releases. Keep abreast with local and world news that will influence stock price. Analyze the market response to news and use economic calendars to monitor happening events.

Technical analysis

Technical analysis is pretty much vital in any day trader’s arsenal. The ability to read candlestick charts into potential reversal patterns tells you where to watch and when. Using short-term moving averages for determining trends, possible crossover points, and an understanding of support and resistance levels allows more profitable decisions on trading.

Risk management

Any day trading strategy requires management of risk. Always determine your risk tolerance and set stop-loss orders in order not to incur huge losses. Diversification of your trades will, therefore, be able to minimize the risk and capital loss.

Day trading in the Australian markets is indeed very rewarding, but it needs thoughtful thinking and the right strategies with implementation for success. The only thing that makes one successful in day trading is the acknowledgment of the dynamics of the market and properly managing it with risk management techniques. Be disciplined; keep learning; and change your strategy as the conditions of the markets change, so is your improvement in day trading performance.

Day Trading Strategies