Day Trading Basics: In and Out Before the Close

Day Trading involves opening and closing all positions within the same trading day. No trades are held overnight, which eliminates overnight risk (gaps, swap fees) but requires focus and discipline during market hours.

What Makes Day Trading Unique

• Timeframes: 5-minute, 15-minute, 1-hour charts.
• Holding Time: Minutes to hours (never overnight).
• Trades Per Day: Typically 2-10 quality setups.
• Profit Target: 20-80 pips per trade.

Requirements for Day Trading

1. Time Commitment

You need to be at your screen during the most active sessions (London, New York, or the overlap). Day trading is not passive.

2. Fast Internet & Platform

Reliable connectivity and a responsive platform (MT4/MT5, cTrader) are essential. Delays of even a few seconds can cost you a trade.

3. Risk Management

• Risk no more than 1-2% per trade.
• Use tight stop losses appropriate for intraday volatility.
• Maintain a minimum 1:2 risk/reward ratio.

Popular Day Trading Strategies

Scalping

Ultra-fast trades lasting seconds to minutes, targeting 5-15 pips. Requires extremely tight spreads and fast execution.

Momentum Trading

Entering trades in the direction of a strong move, often triggered by news releases or breakouts at the session open.

Range Trading

Identifying intraday support and resistance levels and buying at support, selling at resistance during quiet sessions.

The Day Trader's Checklist

Before the session:

1. [ ] Check the economic calendar for high-impact news.
2. [ ] Identify key support/resistance levels on the daily and 4H charts.
3. [ ] Define your maximum daily loss (e.g., 3% of account — then stop for the day).
4. [ ] Set your trading timeframe and stick to it.

During the session:

1. [ ] Wait for your setup; don't force trades.
2. [ ] Enter with proper position size and stop loss.
3. [ ] Don't move your stop loss further away.
4. [ ] Take profits at your target or trail your stop.

Common Mistakes

• Overtrading: Taking 20+ random trades instead of 3-5 quality ones.
• Revenge Trading: Trying to win back a loss immediately.
• No Daily Loss Limit: Blowing through your account in one bad session.
• Trading During News: Getting whipsawed by NFP, CPI, or FOMC announcements.

Day trading can be extremely rewarding for disciplined traders, but it's not easy money. Treat it like a profession.