Day Trading with Price Action or Price Structures – Finding the Method That Suits You

Price structures aren’t just for big swing trades with huge reward:risk ratios. 

They can also be used for day trading. We can also use them for shorter-term swing trades, instead of trying to capture the whole, big, price structure.

In the video below, I discuss some variations of how price structures can be used. 

I also discuss a few more variations below. 

For example, we could take day trades (1 or 5-minute chart) off hourly or 15-minute price structure levels. This would be if you want shorter-term trades without holding overnight. There are still attractive reward:risk opportunities, and maybe one or two trades a day on a pair. 

The EURUSD provided a recent example of this. 

Even trading on one-minute chart price structures can help out. But we don’t necessarily need them. We can just use price action.  This style of trading tends to have more trades, but it doesn’t necessarily have to. Just like discussed above, you can go for fewer bigger reward:risk to trades, or you can trade more actively, booking smaller (reward:risk) profits and losses more often. 

Just like with swing trading price structures, you can day trade on one timeframe, or you can drop to a lower one to fine-tune entries. Or you can just trade on the 1 or 5-minute chart on its own, using the hourly, for example, for some context. Or you could trade on the 5 or 15-minute predominantly, but drop down to the 1-minute to fine-tune entries. 

If you have isolated a big price structure on the daily or hourly chart, which may take a few days for the price to move to the other side of the price structure, nothing says you have to make one big trade for a 20:1 reward to risk trade. The win rate on these types of trade is typically low…30% or less, BUT there is a big pay off on the ones that do hit. On that trek across the price structure, the price is likely to form another, smaller, price structure, often a rising or falling channel. Take 3 or 4 day trades over a few days, attempting to capture 3:1 or 5:1 reward:risk, for example. Lock in profits along the way, and if the price reverses (big price structure trade fails), at least you have something, and not nothing. 

Other people, who may not have a lot of time to monitor or find trades every day may prefer taking a trade and holding it for the big reward:risk. They don’t want to trade in and out of the market all the time.

Make it YOUR Strategy

Ultimately it comes to down to what kind of trader you want to be, and what your lifestyle allows. 

All the preferences discussed above can be factored into the strategy.

There is a sweet spot for everyone, hopefully this provided some ideas on where to find it.

I recently took a Peak Performance workshop with Van Tharp. These are my thoughts and favorite takeaways from the program.

By Cory Mitchell, CMT @corymitc

Disclaimer: Nothing in this article is personal investment advice, or advice to buy or sell anything. Trading is risky and can result in substantial losses, even more than deposited if using leverage.