You can’t predict the future price move of any financial security. If we could predict, then the whole point of trading would be gone. The financial market acts as an aggregate sum of human actions. Sometimes those actions are dictated by emotions rather than rational thinking.
However, we can make smart decisions about a possible price move about a certain asset’s price. Theoretically there are two options for a price to go: up and down. Therefore, hypothetically, chances are always 50/50% when being right. Yet, it is not all that easy. Trading is such a domain where when you are wrong, you might end up losing more than 50% of your total equity, while when you are right, you can make just 1-2%. Aha, here we come to a crucial risk-to-reward ratio, but we will come to that later to dig into deeper.
If you carefully read our blog, then you might have read before that there are numerous methods to approach trading financial markets. Some people advocate for doing rigorous research on a company whose stock you are buying, like checking the balance sheet, income statement, cash flow, management quality, debt levels, and long-term growth prospects. This approach, known as fundamental analysis, aims to determine whether a stock is undervalued or overvalued based on real business performance.
Other market participants prefer a different route: a so-called technical analysis. Instead of focusing on the company itself, technical traders study price action, volume, and market structure. They use charts, trends, support and resistance levels, and indicators to identify probabilities and timing. The core belief is that price already reflects all available information and that market behavior tends to repeat because human emotions like fear and greed never change. This is the argument that is hard to argue with.
And these two schools of thought are always in collision with each other. The advocates of one try to bring up all the evidence they can to dismiss their opposite side's ideas. There was a conference once in the USA (I am rephrasing some of the nuances, it is based on one of the reviews of some traders). The conference was about trading in general. And there was an old gentleman, a veteran trader who made a fortunate operating solely on the fundamental analysis, he was worth several tens of millions of dollars, and he said, “I have never seen a rich technical trade in my life. All they do is draw some useless line on the charts, pathetic.” Then, a host of the conference announced, “And now, ladies and gentlemen, please welcome Paul, a billionaire trader who used technical analysis.” Ahaah, I would love to see the old man’s face at that time. However, the moral of the story is not to dismiss one approach and praise another, both work. It is just that some people find their edge in different ways.
The question asked specifically deals with day trading. At first, I would probably be hesitant and dismissive, saying that day trading should be avoided at all costs. The reason for this initial impulse is not emotions. You see, day trading is too zoomed-in mode of trading. There is lots of noise in intraday charts. They are not so reliable, usually. Also, please note that this domain is dominated by giant high-frequency trading firms. They can significantly affect the intraday price. Competing with them is just a path to the graveyard in trading.
Only a small niche of traders manage to thrive in day trading. This type of trading is hard due to constant market noise, high emotional pressure, and the need for fast, precise decision-making. Prices can change within seconds, leaving little room for hesitation or mistakes. On top of that, transaction costs, spreads, and slippage slowly eat into profits. Without strict risk management, discipline, and a well-tested strategy, most traders end up overtrading and burning their capital rather than growing it.
However, another part of me says that it is quite possible to earn good money in day trading. It is just about experience, perseverance, risk management, and proper mindset. Alright, I am more of an optimist. So, let’s try to figure this out together.
The most important thing is what method to use. I am not going to cover all, only some possible ways, and I will use some examples from the Pocket Option’s platform, which I personally find very convenient.
The method: the approach that I like is to use technical breakouts from a well-defined pattern. The patterns that are of high probability are the ones with a horizontal baseline or the ones that form a clear breakout from the channel.
Look at the chart above that I have attached. This is the price of the Apple stock from the Pocket Option platform, Shares trading mode. It is a 15-min timeframe. As you can see, I have plotted two horizontal lines identifying support (271) and resistance (276) lines. The tactic would be to go long once the support is touched or go short once the resistance is met. Suppose we open a short trade when the price touches 276. What position to open? Where to put the SL order? Well, here we come back to our RR ratio. The SL order would depend on the overall ATR and the distance between S and R. Our anticipation would be that from the resistance level, the price would drift toward the support. The difference between S and R is around 5 dollars, therefore, the SL must be put within 1-2 dollars from the resistance level. Why? Because if we put a wider SL, then we would shrink our RR. Of course, there is no guarantee that the price would go back to support, but that is the point - we don't predict,we just make a good calculated bet. That is the essence of trading.
I would like to remind you that this is the Shares mode. But Pocket Option also has a Quick Trading mode. There it is possible to trade stocks as well. However, the mechanism is different there. We don't buy and sell there, we make price anticipations within a preset time expiration set.
Different assets come with different payout percentages.
The broker offers everything that a trader needs to succeed. From a robust trading platform with a rich indicator library as well as trading tools. The execution is smooth too.
But it is up to you to open a trading position. How you would do that? Well, we have demonstrated a possible way. But beware, it was just an example, not suggestion.
Please note that trading markets, whether it is FX or stock or any other, is a risky endeavor, thus, consider making a thorough analysis before any investment or trading decision. None of the above written is investment advice.
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