This website or its third-party tools use cookies which are necessary to its functioning and required to improve your experience. By clicking the consent button, you agree to allow the site to use, collect and/or store cookies.
Please click the consent button to view this website.
I accept
Deny cookies Go Back
  • Price Action Trading Course
  • Trading Setups
  • Topics ↓
    • Price Action Trading
    • Day Trading
    • Trader Development
    • Site Map
  • TSR Trading Guides
  • Resources
    • Udemy Trading Course
    • Trading Books
    • Trading Indicators
    • Forex Tester 4
    • NinjaTrader & Kinetick
  • Member Login

Trading Setups Review

Trading Strategies, Guides, and Articles for Active Technical Traders

You are here: Home / Trading Articles / Template for a Simple Day Trading Strategy

Template for a Simple Day Trading Strategy

By Galen Woods in Trading Articles on December 31, 2013

Why do traders love simple trading strategies? The simplest day trading strategy is also the most flexible. Hence, a simple day trading strategy is a useful starting point for any day trader.

There are many simple day trading strategies including the simple trend bar failure strategy and the simple strategy using Bollinger Bands. These strategies are simple and easy to follow.

However, these might not be the best day trading strategy for you given your trading style. Why not create your own simple day trading strategy?

Create your own simple day trading strategy with the following template.

This simple day trading strategy template:

  • Covers the necessary parts of a robust trading strategy;
  • Uses no more than two trading indicators; and
  • Allows you to include your favorite tools.

Simply Trade the Trend Template

This is a basic template for trading intraday trends.

1. Find the trend

First, find the trend. Keep it simple and choose only one trend-following tool to help you.

Suggested trend tools:

  • Moving average sloping up or price crossing above moving average
  • MACD moving above zero line
  • ADX moving up above 25
  • Trend lines (HH, HL, or LH, LL)
  • Oscillator indicators with a long look-back period (including stochastics, CCI, RSI)

2. Define a retracement

Now, wait for the trend to slow down and retrace before trading it.

Jumping on a car while it is speeding can get you to your destination. It’s just a little challenging to find ways to do it without getting hurt. It’s the same for trading trends. We can hop on the trend while it is blazing away. The problem is with setting stop-loss orders to protect us.

This is not a problem if you are trading a long-term trend. However, day traders’ have limited profit potential within the day. Hence, we need precise stop-loss points to support our positive expectancy.

Define what is a retracement within the trend. For instance, in the Holy Grail trading strategy, a retracement is when prices fall back to the moving average in a bull trend.

Remember our aim. Choose only one tool to help you with defining the retracement. If you can use the same tool you chose in first step, then you are a champion minimalist trader.

Suggested tools to define a retracement:

  1. Moving average
  2. Oscillator indicators
  3. Trend line break
  4. Break of an earlier swing low (for long trades) or swing high (for short trades)
  5. Price pattern like three-bar pullback

3. Entry and exit rules

A day trading strategy is never complete without specific entry and exit rules. You must know exactly when to enter a position and when to exit so that you can act without hesitation. These specific rules also help to define our reward-to-risk ratio for each trade.

To keep things simple, do not add another indicator. Use the indicators you have chosen from the earlier steps.

Suggested entry methods:

  • Bar patterns and candlestick patterns
  • Any bull trend bar
  • Oscillator turning direction
  • Close above moving average

Suggested exit methods:

  • Bar patterns and candlestick patterns
  • Previous extreme of trend
  • Oscillator turning direction
  • Measured move

An Example of A Simple Day Trading Strategy

Simple Day Trading Strategy - Trend Line Trading
This is a 3-minute chart of CL futures (Crude Oil on NYMEX).

  1. We use trend lines to connect swing points to define a trend.
  2. We need a trend line break before we start looking for continuation trades.
  3. We enter with a pin bar.
  4. We exit at the earlier extreme of the trend.

We used only one trading tool which is the trend line. No trading indicators. A simple price pattern for entry and a previous resistance for exit.

That’s it. Trade simply.

Read more about Day Trading, Trading Indicators

Serious Traders Only!

Day Trading With Price Action – A complete course that teaches you the art of price action trading.

Perfectly structured with step-by-step guides to help you understand the principles of price action analysis.

Click here for the course syllabus

More From Trading Setups Review

How To Choose The Best Day Trading Broker?

A Simple Inside Bar Day Trading Strategy Using YM Futures

Trading the Bollinger Band Squeeze

Trading Course Banner

Comments

  1. Toper says

    September 10, 2016 at 11:30 PM

    Easy to understand.

    When I started day trading, I added so many indicators to a point where it was confusing. I started only using the fewest but more efficient.

    Your tips helped a lot.
    Thank you!
    Toper

    Reply
    • Galen Woods says

      September 15, 2016 at 8:58 AM

      That’s right. Once you get used to the simplicity of a few or no indicators, you’ll not look back. Thanks for your comment!

      Reply
  2. VICTOR T says

    October 22, 2016 at 11:24 PM

    How to trade better and consistent entry and exit point.

    Reply
    • Galen Woods says

      November 4, 2016 at 12:47 PM

      There is no one size fits all rule for this. The main principle to attain consistency is to focus on process over profits.

      Reply
  3. Frank Sauerwein says

    June 9, 2018 at 1:27 AM

    Easy Understanding and exit at the best point.

    Reply
    • Galen Woods says

      June 12, 2018 at 10:48 AM

      Thanks! Exiting at the most recent trend extreme is the most conservative exit strategy for a pullback trade. You can check out more ideas for taking profit in this article.

      Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *


Search Trading Setups Review

Get a Free Course Chapter from Galen Woods' Day Trading With Price Action Course [PDF]

Plus, our latest trading guides and tips in right your inbox.

Recommended For You

4 Trading Myths About The Moving Average

3 Epiphanies Of Resilient Traders

3 Holy Grail Trades

3 Key Trading Barriers and How to Overcome Them

The Power Of Multiple Trading Signals In Confluence Zones

10 Technical Trading Indicators You Must Know

Book List For The Chartered Market Technician (CMT)

Trading Course Banner

Trading Setups Review

  • About Us
  • Contact Us
  • Advertise With Us
  • Privacy Policy
  • Affiliate Disclaimer
  • Full Risk Disclosure

Learn More

  • Day Trading With Price Action Course
  • TSR Trading Guides
  • Trading Setups
  • Trading Articles
  • Trading Books
  • Site Map

Futures and forex trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.


The website contents are only for educational purposes. All trades are random examples selected to present the trading setups and are not real trades. All trademarks belong to their respective owners. We are not registered with any regulating body that allows us to give financial and investment advice.


Trading Setups Review © 2012–2021