3 Steps for Beginner Day Trading Strategy

A good trade has nothing to do with making money.

I know that sounds weird, especially if you’re new. But a good trade is simply one where you follow your rules exactly. Win or lose doesn’t matter in the short term and money is just a byproduct of execution.

You can have the cleanest trading setup in the world and still lose. That’s because the market is random by nature. Even with high probability, there is always uncertainty. If you don’t accept that, emotions will control your decisions.

In this trading strategy, Risk management is the real edge and you don’t need to be right all the time. Just keep losses small and let winners run.

Okay, let’s start!

📉 Step 1: Identify Trends

Before you think about entries, indicators, or fancy concepts, you need to identify the overall trend first.

And here are the 3 steps:

First is Trend.

Price must generally move in one direction with lower highs and lower lows for a downtrend or higher highs and higher lows for an uptrend.

Second is reaction points.

You need to see price react at least two times at similar areas. These are levels where price fails to break through. That tells you supply is stronger than demand.

Third is Break of Structure (BOS).

This is critical and you also need at least two confirmed breaks where the closing candle breaks the previous swing low.

Many beginners mark trends too early. They see one push and assume the trend. This trading strategy forces patience.

Here's an example of Solana $SOL ( ▼ 0.53% ) : The price of SOL has formed a series of lower highs, with each peak being lower than the previous one. When the price touches these trendlines, it creates a reaction point that leads to a downward movement.

When the price breaks above the trendline, the trend reverses, signaling an upward movement.

So remember this: No BOS, No trend.

When all three align, you’re not guessing anymore, you’re building a structured trading setup based on price behavior, not emotions.. That’s when your trading strategy starts to become objective instead of emotional.

🔄 Step 2: Spotting Signals Of A Trend Ending

Now this is where things get interesting! We’re not chasing trends, we gonna wait for them to end.

The first signal is called Change of Character, or CoC.

This happens when price fails to continue the current trend. In a downtrend, price fails to make a lower low and instead closes above a reaction point.

The second signal is the Fair Value Gap, or FVG.

This forms when three consecutive candles leave an imbalance in price. Specifically, when the high of the first candle and the low of the third candle don’t overlap.

The key level inside this gap is the 50% level. This is called the consequential encroachment. Price often retraces here before continuing in the new direction.

This part of the trading setup is powerful because it gives you precision. You’re not buying highs or selling lows. You’re waiting for the signals.

🎯 Step 3: Position To Capitalize

Once you have CoC and a valid FVG, execution becomes much easier and mechanical because your trading setup is already defined in advance.

1. Put Entries at Mid-Point of FVG

Your entry is placed at the 50% level of the FVG. Don’t use a market order, a limit order is much better because you only trade in the appropriate price.

If price doesn’t come back, you miss the trade. And that’s fine.

Your stop-loss goes below the nearest swing low or outside the structure. This defines your risk clearly before you enter.

2. Reduce Risk Completely At New BOS

Now here’s where beginners usually mess up. Many people keep a fixed take-profit or stop-loss level and simply watch, instead of adjusting them in line with the actual price trend.

My trading strategy is when price moves in your direction and creates a new Break of Structure, you move your stop-loss to entry.

As long as price comes back to the entry point, you gotta stop loss immediately!

3. Take Profit At High Probability Reversal Area

There are 2 main ways:

a. Higher Timeframe FVG: Look for high-impact Fair Value Gaps on a larger timeframe, such as using the 15-minute chart when trading on the 1, 3, or 5-minute charts.

b. 61.8% Fibonacci Level: This level, known as the golden ratio, is a key retracement zone and is considered a reasonable take-profit target, especially when it aligns with a higher timeframe Fair Value Gap.

Some traders prefer trailing stops using new FVGs. That’s personal but the core trading strategy stays the same.

I’ve explained this method in more detail in my Scalping Trading Guide, so make sure to read it if you want to learn how to apply it more deeply.

Overall, the efficacy of this simple three-step day trading model ultimately relies not on finding a "perfect trading setup" that guarantees a win, but on the unwavering execution of the defined rules. A good trade is defined purely by adherence to the trading strategy, acknowledging that the money made or lost is merely a byproduct of good trading execution.

By consistently identifying trends, recognizing signals of a trend reversal (like the Change of Character or FVG), and strategically positioning the trade to achieve a risk-free status upon confirmation, this approach allows both beginner and advanced traders to simply execute their established edge with clarity over time.

⚠ This newsletter is for informational purposes only and should not be considered investment advice. Traders should conduct thorough research, understand the risks, and carefully evaluate their decisions before investing in cryptocurrency.

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