The following are several basic strategies by which day traders attempt to make profits. Besides these, some day traders also use contrarian (reverse) strategies (more commonly seen in algorithmic trading) to trade specifically against irrational behavior from day traders using these approaches. It is important for a trader to remain flexible and adjust their techniques to match changing market conditions.

Some of these approaches require shorting stocks instead of buying them: the trader borrows stock from his broker and sells the borrowed stock, hoping that the price will fall and he will be able to purchase the shares at a lower price. There are several technical problems with short sales—the broker may not have shares to lend in a specific issue, some short sales can only be made if the stock price or bid has just risen (known as an “uptick”), and the broker can call for the return of its shares at any time. Some of these restrictions (in particular the uptick rule) don’t apply to trades of stocks that are actually shares of an exchange-traded fund (ETF).

The Techniques you must know:

  1. Trend following

  2. Contrarian investing

  3. Range trading

  4. Scalping

  5. Rebate trading

  6. News playing

  7. Price action

  8. Candlestick charts

  9. Artificial intelligence