Top Day Trading Strategies for Success
What is the best trading strategy for beginners?
It's definitely not short selling, and definitely not chasing breakouts in my opinion. A strategy needs to have a set of simple criteria and repeatable patterns; then, and only then, it can be considered a good strategy that's profitable and suitable for traders of all levels.
I've made hundreds of videos on strategies that you can learn and apply to your own trading. Today, I want to challenge you to follow the step-by-step strategy lesson closely. By the end of this blog, you would have picked up the strategy that I personally consider to be my A+ setup: the gap-up reversal long strategy that made me over $7,000 today.
In this article, you're going to learn:
Three golden criteria for you to use as your strategy checklist,
The psychological and technical factors behind this long strategy,
Understand what really makes this pattern repeatable and suitable for beginners for timing entry signals,
And a live trading example of how I executed this strategy and made over $5,800 in under 30 minutes.
I spend a lot of time planning and creating these kinds of educational content. If you want to see more, make sure to check out the full video and drop a like. No, it's not going to make you Lamborghini money, but I genuinely appreciate your support and motivation to kick off this particular strategy that I used for two trades today that made over $77,000 in total.
The three golden criteria of a profitable day trading strategy
#1: An overnight gap-up
For example, here, the stock gapped up from $79 to over $98 premarket. This is over a 5% overnight gap-up.
#2: A strong positive catalyst.
In this case, for the stock, they beat on earnings on all 3 metrics.
#3 A bullish daily chart.
So, in this particular example, here you can see we're gapping up over the daily resistance at $93, $95, $96, and also $98. That's what I mean by a very strong bullish daily chart.
The psychological and technical factors behind the Gap-Up Reversal Long Trading Strategy
Of course, as we talked about earlier, you want to see a huge overnight gap-up. And not just any gap-up; you want to see a gap-up in this case with a very positive earnings catalyst. And once again, like I've explained many times on my channel, the reason you want to look for these gappers that have gapped up so much overnight due to positive catalysts is because you want to have other investors, traders, institutions be attracted into the stock to create volume and range for you to profit from.
That's the whole reason $DDOG was able to gap up from $79 to $96 premarket and even after that continue to break through $100 here, pre-market highs, and then slowly trend all the way up to $104. That's the kind of range we're talking about. We're not talking about a 50 cents move; we're talking about a stock that can move 2, 3, 5, 10 points in one day.
The technical analysis on $DDOG stock
Now, the reason you want a huge gap-up premarket and not just any gap-up: you want to see the stock already kind of trending up pre-market. So you can see after hours it gapped up pre-market this morning. It had a little pullback at around 8:00, had the pullback from $98 down to $94, but later on reclaimed that pre-market VWAP over here, reclaimed on the 5-minute chart, and slowly reclaimed to $98, $99. This provides you the pre-market level to use those intraday supports.
And you can see that pre-market support area, $95, $96 range, is what I'm going to be using as a key level later on in a live trading recording. And once you have that key level to use from both the daily chart as well as intraday, you can use that level to plan your risk, entry areas, and potential profit targets.
So, in this case, if I get in around this $96 area, I want to be aiming for that pre-market resistance around $99.50, the $100 mark, and even higher to the daily chart, you can see over that $100 you have upside to $101 here as well as on this little wick on the daily, $102, $2, and potentially even higher to $104.
What's the most successful day trading strategy?
A successful day trading strategy is one that is highly repeatable and suitable for beginner traders. While there are many great strategies for day trading, there are two reasons why the Gap-Up Reversal Long Strategy is recommended.
Reason #1: Easy to find the right stocks to trade for this strategy
Like I said earlier, with all the criteria we just mentioned, these gap-ups, especially on large-cap and mid-cap stocks, they happen very often among these stocks like Apple, Tesla, DDOG, or even cheaper stocks like Block or Coinbase. And you can do that with either paid or free scanners as well.
Reason #2: Beginner-friendly technical analysis
The technical support and resistance levels on the daily charts are very likely to form and very easy to plan out.
If you just use a daily chart on this example here, you can see all the potential support/resistance and you can use your intraday chart to kind of reaffirm your thesis. It's quite simple. I shouldn't use the word easy; it's simple to plan your entries, risk-reward, and upside price targets.
Planning for the entries
You're not buying a breakout on this particular strategy; you're buying the breakthrough of the key level consolidation, and you're watching it pull back and slowly grind up higher.
That's the reason you're going to see in my live trading recording I use the 5-minute chart as well as the 2-minute chart. You'll see in a live trading example that I'm not getting in at the high of the day breakout; I'm buying on these little pullbacks at $97 VWAP reclaim. And once it starts consolidating over that $99 area, and then selling into the breakout. And this is how you can also plan to have a decent risk reward when you're buying the breakout.
A lot of times, once the stock breaks out, let's say right here at $101, you're immediately running into resistance a dollar or $2 later. You don't have time to let this thing reclaim VWAP, reclaim pre-market highs, and slowly trend up.
Live trading example
Is it possible to get rich day trading? It takes This is how I executed this particular strategy and made over $5,800 in 30 minutes.
You're going to see my entry, stop loss, as well as profit target, and how I read price action to stay in a winner and let it work.
So you can see over here, the market had just opened. It's 9:30 a.m. market time. You can see DDOG 2-minute chart at the bottom here. I got in once the stock tested that VWAP area, the pre-market VWAP we talked about earlier, at around $97.80s.
I started in with 1000 shares. Now my plan is to slowly add into it. My starter size on this will actually be 500 shares, but I think today I'm feeling quite good about the stock.
Fast forward a couple of minutes later. Well, only about two minutes later, the stock is trading around the $97.40 area. I'm down about 40 cents, but I'm not panicking. I'm looking at the stock, looking at are we going to hold that pre-market VWAP, or are we actually going to test that key level I planned out at $96?
You can see I have an order sitting there, seeing if I'm going to get filled. Fast forward a little bit, we're still trading around that $97.80 area with small pullbacks here and there.
But once again, this $DDOG moves in big ranges. You cannot be risking just a dollar, and it only went down to $96.40s for a split second. Let's see, does it break down, or does it slowly consolidate and reclaim?
You can see on the top, I like to switch back and forth between the 2-minute and the 5-minute chart. I'm looking at a 2-minute chart. I'm looking, okay, are we really selling off, or are we just slowly holding that pre-market support area around $96? I'm trying to see if I can just add a little bit down here at $96.
On the 5-minute chart, I’m seeing a little wick at the bottom of the candle getting bought back up. To me, that's a bullish sign, especially for a stock that has such a strong catalyst of earnings beat. We are testing that VWAP area on the 2-minute chart, so my starter size is usually 500 shares.
I decided to trim my position down from 1000 down to 500 just to be safe. After all, we're still within 10 minutes of the market open. I trimmed 500 shares just to reduce my risk a little bit during this uncertain period. So I'm down to 500 shares at $97.80s average. I realized a loss of $380.
Later on the five minutes, we're immediately jumping over VWAP. I added back in 1,000 shares that gave me an average of $97.90, and we are already skipping up.
That's the thing with this $DDOG—it's a stock I've traded in the past. When it breaks out, it kind of skips in dollars; when it sells off, it sells off slowly in like 20 cents. So I'm glad I got in.
On the two-minute chart, we are already skipping through to $99. That's how fast these things go. Again, bullish daily charts down here—that's really great to see. You can see on the daily charts, you are breaking out through that $96 premarket. You really don't have any strong resistance until 101, 102 on the daily, so that's the beauty of having a daily chart on the side, as well as your intraday chart, so you can see the bigger picture.
And then we are already testing that $100 mark. I added some more over here, as you can see—added up here, 500 shares. Now I have 2,000 shares at $98 and 38 cents average.
I sold a little bit, should have held it, but I did sell 300 shares at around $100 because I think I was looking at that pre-market resistance right here.
You can see on the yellow line that pre-market resistance. Trying to be safe, but sometimes you don't want to be too conservative. I sold a little bit more. It was a shame into that 180s. No worries, I still have a remainder of 1,400 shares.
We're pulling back to that $99 area, but the action still holds up quite well. You can see this ddog, despite that $100 rejection, you're not getting like an immediate pause here on the top two-minute chart.
It is still below that $100 area, the resistance, but holding up at $99 quite, quite alright. You're not seeing like an instant rejection down to VWAP. So to me, you know, it's a good sign. The stock needs time to slow, consolidate, to go up higher.
Taking profits and planning the exits
Beginners always ask me: What is the best profitable trading strategy? Well, there are various trading strategies and styles but profit-taking must be planned and incorporated in a profitable strategy.
Fast forward, I sold into the 101s, realizing $3,100. Now I have a remainder of 730 shares on $DDOG with the same average as before. I'm being patient on the five-minute chart on $DDOG. Trying to see like, okay, are you going to consolidate and go higher?
$DDOG is now testing 102s at the bottom window. I'm looking to sell everything into that 102's breakout, locking in $4,000 on $DDOG. Now I only have 300 shares left.
Finally, I sold the remainder 300 shares at 103 on $DDOG, locking in $5,800 on this particular stock.
What is the secret to successful day trading?
The “secret” is to have a defined and repeatable strategy checklist.
Again, on this particular strategy, you're looking for an overnight gap up like you see on $DDOG. You have a very positive catalyst on this ticker, a very bullish daily chart, and a gap-up over the recent daily resistance.
I hope you learned a lot from today's strategy lesson and apply this to your own trading starting tomorrow.
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