How To Day Trade Stocks With A Trend Strategy - Entries, Exits, And Risk Management

Learn how day trade stocks, including how and when to enter and exit trades, manage risk, find stocks to trade, what times to trade, and what indicators to use (if any).

This strategy takes multiple trades each day and uses a 1-minute chart. It is an intraday price trend strategy that requires less than two hours of trading (although you could trade more if desired).

Day Trading is tough, no doubt about it. But making some money—even if it’s a bit of extra money—is possible with the proper plan and a crazy amount of discipline and patience.

There are several steps to becoming a successful day trader.

  1. Build a plan. This will include entries, exits, risk management, what times you will trade, what stocks you will trade, and guidelines for when you shouldn’t trade.
  2. Practice like crazy, but only practice what is in your plan. NOTHING ELSE!
  3. Learn to control (not ignore) emotions, and stick to the plan when real money is on the line.

Steps two and three are the really hard ones. Most people can come up with a plan. In this article, I am going to give you one. I will layout how to enter, exit, management risk, what to trade, and when.

Steps two and three are up to you. So with that in mind, here’s how to day trade stocks, laid out step-by-step. These sections all compose your trading plan. A trading plan is a written document that lays out exactly how you will trade (or not trade) in all circumstances. Keep the trading plan by your desk while trading and refer to it regularly to make sure you are following it.

What Stocks to Day Trade

There are lots of stocks to day trade, so we need to narrow it down to only a few, or one, to trade. There are a few of ways to do this for this strategy.

  • Pick one stock and trade it all the time, or at least for a while.
  • Run a daily scan to find stocks that are moving well that day.
  • Run a weekly scan for stocks that are likely tradable all week (and potentially longer)

Picking One or Two Stock to Day Trade

The most efficient way to day trade is to pick one stock or Exchange Traded Fund (ETF) and trade it every day. For example, you could just pick the SPDR S&P 500 (SPY) or Apple Inc. (AAPL). These are not recommendations, just examples. For some ideas on stocks to trade, check out the Best Day Trading Stocks page. You may find a stock you like there, or you may find one on your own.

Pick a stock that does lots of volume (so you can scale up your position size as you get better) and that also has a decent amount of movement. It should move enough that you see several large price swings in the morning, and potentially after the lunch hour if you want to keep trading that long.

The goal is to find a stock that suits your trading style and strategy and then become a master in it, in all trading conditions. There is no magic formula for picking a stock. If it moves a decent amount and does lots of volume every day, it can be day traded.

Screening Daily For Day Trading Stocks

Some people prefer to scan daily for stocks making big moves, and then trade those. This means the stocks you trade will likely change daily.
You will need to pay for scanning software with this approach. I use Finviz Elite, as it provides real-time scanning, pre-market scanning, and loads of other features.

Screening means more work, more jumping around between stocks (which may require more chart windows and computer monitors) which is another skill set to learn.

On the Best Day Trading Stocks page, I provide a brief rundown on how to screen for stocks that are trending big during the day.

Time of Day to Day Trade Stocks

The first hour the market is open is the best hour. If you are going to trade only one hour per day, make it the first hour. That is where the biggest moves happen.

When I day trade stocks, I usually only trade the first 90 minutes to two hours of the day.

Therefore, 9:30 AM EST till about 11 AM EST is the ideal time to day trade stocks.

Don’t open new trades between 11:45 AM and 12:45 PM EST. Things quieten down during the “lunch hour.” If you still have trades open heading into the lunch hour, exit them via your exit rules (discussed below).

Take a break during lunch. Clear your head. Eat something. Stretch, go for a walk. Do something other than look at your screens.

If you want to keep trading after taking a break for lunch, you can start looking for setups around 12:45 PM EST, as things usually start moving a bit more around 1 PM EST (approximately).

The last hour of trading, from 3 PM to 4 PM EST, also typically has some big moves.

Over the years I have found that most days I make between 3 trades (quiet day) and 8 trades (lots of action day) in the first 90 minutes of trading. Yet between 1 PM and 4 PM I typically only make about 3 trades on an active day, and only 1 or 2 trades on a quiet day.

In my experience, most of my profits come before lunch in only 90 minutes. If I keep trading after lunch, my profits go up only marginally for putting in a lot more hours.

Therefore, I have opted to only trade the first 90 minutes to two hours of the day. You may find the afternoon is great for you, and in that case, you should trade it. But if you are putting in a bunch of extra hours and it is not increasing your profits, there is no point.

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Disclaimer: Nothing in this article is personal investment advice, or advice to buy or sell anything. Trading is risky and can result in substantial losses, even more than deposited if using ...

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