5 Best Day Trading Strategies for Forex, CFDs and Stocks

Day trading, in which you buy and sell financial assets on the same day, is a style of investment that can bring in healthy profits.

As well as options and futures, you can also use day trading strategies to buy and sell forex and stocks.

In this guide, you will learn more about the best day trading strategies for forex and stocks, as well as an overview and the key features of the best day trading brokers. You will also get answers to frequently asked questions.

Top 4 Day Trading Brokers

1. Plus500 (CFDs)
2. eToro
3. IG Group
4. Interactive Brokers

Plus500 instruments are available for trading exclusively via CFDs and the service offered on the platform is CFD-based.

Key Features:

• Commission-free trading
• Advanced charting tools
• Excellent customer service
• Low spreads on popular markets

Plus500 currently offers three platforms:

• Plus500CFD, featuring over 2,800 CFD instruments
• Plus500Invest, providing access to more than 2,700 shares (available in select countries)
• Plus500Futures, which is exclusively available in the US

Plus500 is a user-friendly platform tailored for day trading forex and stocks, offering competitive spreads and fast execution speeds to meet the needs of active traders. Its intuitive design ensures quick navigation, while its powerful tools provide essential features like real-time market data, customizable charts, and risk management options, including stop-loss and take-profit orders.

For forex day traders, Plus500 provides access to a wide range of currency pairs, from major pairs like EUR/USD to minor and exotic pairs, with low spreads and no commission fees. Stock day traders can take advantage of contracts for difference (CFDs) to speculate on price movements without owning the underlying asset.

The platform also supports other tradable assets, such as indices, cryptocurrencies, and commodities, giving day traders diverse opportunities to capitalize on market fluctuations. Regulated in multiple jurisdictions and equipped with a free demo account, Plus500 is a reliable and accessible choice for traders looking to engage in the fast-paced world of forex and stock day trading.

Key Features:

• Copy trading feature
• Wide asset selection
• Commission-free trading on some assets
• Robust educational resources

eToro is a social trading platform designed to make day trading in forex and stocks accessible and beginner-friendly. Its standout feature, CopyTrader, allows users to replicate the trades of experienced and successful traders in real time, making it an excellent option for those new to the fast-paced world of day trading.

eToro provides access to a broad range of instruments, including major and minor forex pairs, popular stocks, and commodities, giving traders diverse opportunities to explore multiple markets. The platform’s intuitive interface and advanced tools, such as customizable charts and risk management options, support both learning and efficient trading.

Additionally, eToro offers a demo account, allowing traders to practice strategies without risk, and a wide range of educational resources, such as tutorials and webinars, to build trading confidence. With its regulated environment and community-focused features, eToro is an excellent choice for day traders seeking to balance learning with hands-on market experience.

51% of retail investor accounts lose money when trading CFDs with eToro. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Key Features:

• Industry-leading research tools
• Advanced trading platforms (ProRealTime, MetaTrader)
• Extensive educational resources
• Low fees on stocks and forex

IG Group is one of the most established brokers in the industry, known for its low spreads and powerful charting tools, making it a top choice for day trading in forex and stocks. With a reputation built on reliability and transparency, IG offers access to a broad range of assets, including major forex pairs, popular stocks, commodities, and indices, providing traders with diverse opportunities in fast-moving markets.

The platform features advanced charting and analysis tools, including real-time data, technical indicators, and customizable charts, all designed to help day traders make informed decisions quickly. IG’s proprietary trading platform and mobile app ensure that traders can execute their strategies seamlessly, whether they’re at their desk or on the go.

With a regulated environment and access to educational resources such as webinars, tutorials, and expert market insights, IG Group is an excellent platform for day traders who require both reliability and advanced tools to navigate the complexities of the forex and stock markets.

Key Features:

• Advanced trading platforms (Trader Workstation)
• Extensive asset selection
• Low commissions and margin rates
• Detailed market research tools

Interactive Brokers is a top-tier broker known for offering access to a vast array of global markets and assets, including forex, stocks, options, and futures, making it an ideal platform for active day traders. With its low commissions and competitive spreads, Interactive Brokers allows traders to maximize their profitability while minimizing trading costs.

The platform is equipped with powerful trading tools, such as Trader Workstation (TWS), which offers advanced charting, real-time data, customizable technical indicators, and algorithmic trading features. These tools are particularly beneficial for active traders who need precision and speed in executing high-frequency trades across diverse markets.

Interactive Brokers also provides access to global liquidity, allowing traders to engage in multiple asset classes across international markets with ease. For traders seeking a professional-grade platform with in-depth analytics and low-cost trading, Interactive Brokers is a reliable choice, especially for those looking to make the most of opportunities in forex and stocks day trading.

What Is Day Trading for Forex and Stocks?

When day trading forex and stocks, the goal is to buy assets at a low price and sell them at a higher cost before the market closes for the day. This style of trading allows individuals to take advantage of the rapid price fluctuations that occur throughout the course of one day.

One major benefit is that it removes the possibility of waking up the next day to drastic stock market fluctuations that have undermined the value of your assets.

After buying forex and stocks, day traders will aim to sell them within hours, minutes or even seconds.

Day trading differs from other trading styles that follow a ‘buy and hold’ approach. It provides an opportunity to secure small and frequent profits instead of waiting for long-term investments to pay dividends.

With just one day to buy and sell your assets, day trading is a fast-paced approach that requires focus and discipline.

As long as you pay close attention to the market, day trading can be a great way to generate profit.

As day trading is such a rapid approach, there are a few basic principles that you need to consider before buying forex and stocks.

The first principle is risk management. When planning to begin day trading, you need to identify potential risks and assess how they might impact your stocks and forex portfolio. To protect your investments and mitigate profit loss, you should consider diversifying your portfolio.

What’s more, as the market conditions can vary wildly throughout the day, it is crucial that you monitor stocks and forex performance and adjust when necessary.

Another principle to consider when day trading forex and stocks is volatility. While the term may sound negative, volatility is often key to successful day trading. When stocks and forex values experience large movements, day traders can act quickly to sell their assets for the best price. Of course, volatility can also increase risk which is why risk management is so important.

When it comes to day trading, timing is everything. Knowing when to hold out and when to sell your stocks or forex is a skill that you will learn while day trading.

The final principle to be aware of in day trading is using leverage.

Leverage refers to the use of borrowed money to increase buying power – that is the trading capital you have in your broker account. Using leverage can boost your buying power by up to 100 times.

5 Best Day Trading Strategies for Forex and Stocks

There are several strategies that you can use when day trading forex and stocks. In this guide, you will learn the best five approaches to get you started.

1. Trend Following Strategy

The trend following strategy is a simple way to track the best times to sell your stocks and forex.

To use this approach, you will study the direction of asset prices and note whether they are moving upward or downward.

If the trends are moving upwards, day traders will buy and keep hold of their assets. When trends move downwards and the price drops, this acts as a signal to sell before forex and stocks lose more value.

Day traders use tools called technical indicators to identify trends. One indicator is moving averages, which provide a clearer picture of whether an asset’s price has generally been going up, down or remaining the same. The indicator can be used to monitor when prices cross the average, signalling the optimum time to sell.

Using a trend following strategy is best for use with markets that have clear, strong trends.

If you choose to use the trend following strategy, you must go with the flow of the moving market. The nature of this strategy requires you to accept that there may be drastic changes. When the market is volatile, buying and selling at the right times can earn you significant profits.

2. Scalping Strategy

Another strategy that is good for day trading forex and stocks is scalping. This short-term strategy focuses on capturing tiny profits by opening and closing positions very quickly.

The best way to use scalping is by focusing on very short-term time frames such as one- and five-minute charts. As each opening and closing generates a small profit, you should be prepared to make many trades.

This approach works because repeated small profits build up to a significant amount of revenue.

Scalping works well in highly liquid markets like forex or popular stocks.

It can be an intensive strategy, as you will need to make quick decisions based on the fluctuations of the stock market. To make scalping work for you, ensure you are using a broker that offers tight spreads and quick order execution.

Scalping is not offered on the Plus500 platform.

3. Breakout Trading Strategy

Another optimal trading approach for forex and stocks is the breakout strategy. The term breakout refers to when the price of a forex or stock goes higher or lower than usual. These uncommon movements can indicate the start of a new trend for the value of forex and stocks. Such an indication can be a signal to open or close a sale.

Day traders using the breakout strategy can identify potential breakout points with support and resistance levels.

A support level is a ‘floor’ for asset prices – a level that prices do not typically fall to. If the price of an asset, whether stock, currency or commodity, drops below the support level, you can infer that the price is likely to continue to fall.

At the opposite end is the resistance level. This is where the stock or forex price will typically stop. If a price breaks out above the resistance level, this might indicate that the value will continue to rise.

You can use volume analysis to confirm the breakout points so you can act at the optimum time and sell assets for the best price.

4. Range Trading Strategy

Another strategy ideal for day trading forex and stocks is range trading. This approach enables traders to buy and sell their assets at a reasonable price when the market isn’t trending, which can be up to 70% of the time.

Range trading forex and stocks occurs when the price fluctuates within a defined range. Traders can profit by buying at the lower boundary (support) and selling at the upper boundary (resistance).

Day traders can use the Relative Strength Index (RSI) to gauge assets that are too expensive or too cheap. Equipped with this information, you can plan to buy at the support level and sell at resistance.

It is a good idea to set stop losses in your trading to avoid large losses should the price break out of the range.

5. News-Based Trading Strategy

In day trading, using a news-based strategy means taking advantage of large price movements that occur following significant news releases.

The stocks and forex markets tend to be heavily impacted by news, making a news-based trading strategy ideal for buying and selling these assets.

Some of the news headlines that can affect the value of stocks and forex include economic reports, corporate earnings and geopolitical events.

If you want to use the news-based trading strategy, you will need to stay updated with financial news. This is crucial so that you can enter trades based on the market’s initial reaction to the news.

It is important to be cautious when using a news-based strategy, as these trades can be highly volatile and unpredictable. You should always use stop losses to avoid losing more than you can afford.

Frequently Asked Questions

Final Thoughts on Day Trading Strategies

Day trading stocks and forex can be a lucrative practice as long as you take the time to research the necessary principles and strategies.

It is important that you understand the risks of day trading and how you can manage and mitigate it. If you are new to trading with forex and stocks, it is a good idea to start small and gradually increase your positions as you gain more experience.

Once you are familiar with day trading, you will need to continuously learn and adapt to ensure you are at the top of your game.

By understanding the principles and strategies of day trading, you can begin trading forex and stocks with confidence.

Leverage can boost profits but also magnify losses, potentially exceeding your initial investment. Always weigh the risks carefully.