Stocks daytrading strategies for beginners
The key task for the developer is to found the right strategy.
It is time killing to test the system with different stratgies and messure the performance. But it makes the greates joy to develop your own strategy who works.
My strategy, to pick out of the best stocks for the next week, consists of several parts and is more complex.
But if you want to build you own simple algorithmic trading system, here I would like to show you, piece by piece, stocks daytrading strategies:
Pivot-Point Strategy (PP)
pivot point (true close price) = (high price + low price + close price)/3
first stop price = (2x true close price) - high price
first target price = (2x true close price) - low price
second stop price = true close price - (high price - low price)
second target price = true close price + (high price - low price)
potential to buy, if result is positive
potential to short-buy, if the result is negative
Bollinger Bands (BB) as trade indicator and Moving Average Convergence/Divergence (MACD) as support signal
bollinger bands have 3 bands: lower, middle, upper
determinate the trend of Bollinger Bands: up(+)/down(-)
if down-trend of lower band, then downtrend
if up-trend of upper band, then upward trend
the rise of the trend determinate the strength of the trend
if the trend is very strong, the stock price quoted for a long time at overbought/oversold area
for avoidance of error-(buy/sell)-signals, I use the MACD
the MACD usually consist of EMA-12 (fast EMA), EMA-26 (slow EMA) and SL-9 (signal line)
(12, 26, 9 are usually days or minutes)
if the fast EMA intersect the slow EMA bottom-up, then is due potential for long buy signal
if the fast EMA intersect the slow EMA top-down, then is due potential for sell signal
instead of EMA you can use SMA
the EMA respond more faster on price changes
therefor EMA is better for short-term trading
I use this strategy for short-entry only with the support of charts
a blind trust of this signal indicators only, is not advisable!
signal indicators should only support the chart
potential for long buy signal, if the current stock price touch the upper bollinger band
potential for short buy signal, if the current stock price touch the lower bollinger band and change to up-trend
potential for exit/close position signal, if trend of bollinger bands change