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Indicators:
EMA 3 (blue)
EMA 20 (yellow)
EMA 50 (orange)
EMA 100 (red)
EMA 200 (purple)
Bollinger Band Period 20 Deviation 2 (green)
Bollinger Band Period 20 Deviation 1 (white)
To day trade US stocks, you need to maintain an account balance of $25,000 or more. Start with at least $30,000 if you plan to make more than 4 day trades per trading week. 4 day trades or more per week gives you “day trader status” and you're subject to the $25,000 minimum account balance.
Find stocks to day trade in one of three ways:
Trade the same stock(s) all the time. Have one, two, or possibly three stocks you become an expert in.
Run a stock screener each week to find two to four stocks that provide good volume and volatility, and then trade those all week.
Look for stocks to trade each day.
Day traders usually buy on borrowed money, hoping that they will reap higher profits through leverage, but running the risk of higher losses too. While day trading is neither illegal nor is it unethical, it can be highly risky. Assume you open an account for $100 (the minimum initial deposit most forex brokers accept). Your risk on each trade is therefore limited to $1 per trade (1% of $100). If you place a trade in the EUR/USD, buying or selling one micro lot, your stop loss order must be within 10 pips of your entry price.
Day trading, on the other hand, involves buying and selling securities within the same day. Day traders often use borrowed money to take advantage of small price movements in highly liquid stocks or indexes. That salary is often paid to traders who are less experienced and newer to the field. For those who have been in the industry for quite some time, salaries easily average about $224,000 per year. The top 10 percent of traders who work on Wall Street have salaries that approach $300,000 per year.
The Rolling Five Day Method: This is the best, and I believe, safest method for day trading a sub-25K account. You are allowed to do three day trades during a rolling five-day period. You won't get 4x buying power, but you can use regular 2x margin for your trades. You can buy and sell a stock on the same day as many times as you want – that's what daytraders do. However, your account must be approved for daytrading, otherwise your broker will restrict your trading if you are flagged as a “pattern daytrader” per the Securities and Exchange Commission (SEC)'s rules.
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