Are you struggling with day trading? Just breaking even? Make no mistake. Break-even is a significant trading milestone. But I’m sure you want to boost your day trading profits to the next level. In that case, you need to fine-tune your trading approach.
Here are four practical ways to boost your day trading profits. Regardless of your day trading style, you will find them useful.
#1: Limit the Number of Trades Per Session
Many traders have a daily stop-loss limit or profit target. The former is a form of risk management. The latter is simply a personal aim.
While these rules might work for some traders, they have one undesirable trait. They focus on monetary outcomes.
To increase your day trading profits, you must go beyond think about money. You need to focus on the quality of your trading setups.
To do this, limit the number of trades in each trading session. Having limited opportunities to trade forces you to select your trading setups carefully.
It discourages sloppy trading and prompts a sniper-like attitude. Unlike the machine gunner, a sniper might have just one chance to hit his target. This explains why a sniper is far more accurate.
If you limit your trades, you will see an improvement their quality. This will in turn lead a boost in your day trading profits over time.
#2: Trade During Volatile Periods
During its volatile hours, price swings are longer. This implies a larger profit potential. Hence, a day trader often makes most of his profits during the most volatile time of the day.
During the dead periods, a day trader loses more as price movement is muted. These losses take the form of relentless whipsaws.
Many traders are trapped by the thinking that a day trader has to trade the entire session. Not true.
Focus your energy on picking setups during volatile hours. And avoid the period when the market tends to congest. This simple hack can boost your day trading performance and save your time.
To find out which hours are more volatile, look at the bar range on the hourly chart. For forex traders, you have a nifty tool for this.
#3: Trade Volatile Markets
Every market has its personality. Some markets move in bouts of fast action, others meander through the day.
Understanding the tendencies of a market is beneficial for day trading. However, this is something hard to define. You can only learn it by spending some time staring at how prices move.
Nonetheless, there is one market characteristic you can compute easily. It is the market’ volatility. Just look at the average trading range of each market and find out how much is it worth in cash terms. The greater the volatility, the greater the profit potential.
If your strategy allows, trade the volatile ones to maximize your earnings. They produce greater moves in a shorter time. As such, they offer a solid way to use your day trading capital efficiently.
In a nutshell, volatility is crucial for day traders looking to boost their profits.
#4: Find Low Risk Entries
Part of earning more is losing less. Don’t fix your attention on only how much you can earn. Pay attention to how much you stand to lose.
Keeping risk low in a volatile market is the basis of a sound strategy. A volatile market has powerful price swings. The usual context of a volatile market is high risk with high return. But if you can find a low-risk setup in that context, you end up with a high reward-to-risk ratio.
One way to do so is to look for narrow setup bars like the NR7 pattern.
Limit Your Trading to Boost Your Profit
Many traders seek to trade more and do more to boost their day trading profits. They don’t realize that the simpler way is to do the opposite.
- Limit the markets you trade.
- Limit the hours you trade.
- Limit the number of trades you take.
- Limit the risk you take on.
Follow these tips to focus on trading under the most profitable environment.
Looking for some music help you focus while you trade? We’ve rounded up the best sources of good music for trading.
Want more ideas for improving your day trading? Take a look at these tips for intraday price action traders.