When it comes to day trading, there isn’t a one-size-fits-all approach. Personally, I don’t often base my trades on moving averages. While I glance at them for potential support or resistance levels, I find that trend-based strategies can leave you exposed in the market for hours. That doesn’t fit my personality—I prefer to lock in profits in minutes, not hours. Plus, these strategies tend to work best during the lower volatility of mid-day, whereas I focus on the morning session's high volatility.

That said, moving average trend strategies are excellent for many traders. They don't demand split-second decisions, so you can often enter trades manually without Hotkeys. The entry and exit points are usually clear, which is a huge advantage for traders paying higher commissions who can't afford to scale in and out of positions. This highlights one of the fundamentals of day trading: your strategy must align with your personality, account size, and risk tolerance. Understanding risk management and trading psychology is just as important as reading a chart.

Instead of just copying a method from a book or a mentor, the goal is to slowly develop a preferred approach that works for you. Let’s explore some of the core day trading strategies that form the foundation for many successful traders.

Using VWAP to Track Institutional Moves

One of the most critical technical indicators for day traders is the Volume Weighted Average Price, or VWAP. In simple terms, VWAP is a moving average that also factors in the volume of shares traded at each price level. While standard moving averages only look at price, VWAP gives a truer picture by considering volume, which is why your trading platform likely includes it by default.

VWAP essentially tells you who’s in control: buyers or sellers. When a stock trades above its VWAP, it signals that buyers are driving the price. If it breaks below, sellers are gaining the upper hand.

This indicator is especially important to institutional traders at hedge funds and investment banks who need to buy or sell massive positions. They can’t just drop a million-share order without moving the market, so they liquidate their positions slowly throughout the day. Their performance is often judged by how their execution price compares to the VWAP. A buy order filled below VWAP is a win because they bought at a discount compared to the average. A sell order above VWAP is also a win. Because of this, institutional traders often try to execute their large orders around the VWAP, creating predictable activity that retail traders can use to their advantage.

How to Trade with VWAP

In the first 5-15 minutes after the market opens, volatility is high. Once things settle, a stock often tests the VWAP. This is where you see if big institutions are waiting to make their move.

• Going Long: If a stock pushes above VWAP and holds, it suggests a large institution is buying. This creates an opportunity for day traders to go long, riding the upward momentum.
• Going Short: If the price reaches VWAP and gets rejected, it often means large shareholders are selling off their positions. This downward pressure creates a great short-selling opportunity.

Let's look at a real example with SolarCity (SCTY). I noticed the stock found support above VWAP around $21. I bought 1,000 shares, setting my stop as a 5-minute candle close below VWAP. I sold half my position at $21.50 and the rest at $22, locking in a profit because whole and half-dollar marks often act as resistance.

VWAP works just as well for shorting. On another day with SCTY, I saw VWAP acting as resistance around $23.25. I shorted the stock, and when the buyers finally gave up, the price dropped to $22, giving me a solid $1,000 profit.

My VWAP strategy boils down to this:

1. Monitor price action around VWAP on my watchlist stocks.
2. Buy as close to VWAP as possible for long positions, with a stop just below it. For shorts, I enter near VWAP with a stop just above it.
3. Hold the trade until I hit my profit target or another key support/resistance level.

Support and Resistance Trading

While some traders rely on diagonal trend lines, I find them too subjective. Two people can look at the same chart and draw completely different lines based on their bias. The market, however, remembers price levels. That’s why I prefer horizontal support and resistance lines—they’re my favorite style of trading.

• Support is a price level where buying pressure is strong enough to stop a downtrend and cause a bounce. You can identify it by connecting two or more bottoms on a chart with a horizontal line.
• Resistance is the opposite—a price level where selling pressure interrupts an uptrend. It's found by connecting two or more tops.

The effectiveness of these levels becomes a self-fulfilling prophecy, as countless traders buy at support and sell at resistance. Before the market opens, I identify my "Stocks in Play" (stocks with a fundamental catalyst, like an earnings report) and then look at their daily charts to find these critical price levels. Finding them takes practice, but here are some pointers:

• Look for Indecision: Areas of support and resistance often have indecision candles where buyers and sellers are battling.
• Mind the Numbers: Half-dollar and whole-dollar marks often act as invisible support or resistance, especially for stocks under $10.
• Focus on Recency: Recent price data is more relevant. If a stock is trading at $20, support/resistance levels from when it was $40 aren’t important.
• Think in "Areas": These levels are zones, not exact numbers. A support level at $19.69 might really be an area from $19.62 to $19.72.
• Draw Lines on the Wicks: For day trading, it’s better to draw lines connecting the extreme highs and lows (the wicks of the candles) rather than the body. These extremes were created by other day traders.

Consider a trade I took on CarMax (KMX) after it gapped down on bad earnings. I identified four key levels on its daily chart: $47.93, $48.42, $48.67, and $49.15. When the market opened, the stock hit the $47.93 support level with high volume. I bought 1,000 shares there. The price bounced, and I sold my shares at the next two resistance levels ($48.42 and $48.67) for a profit. This is a prime example of putting one of the core day trading strategies into practice.

Opening Range Breakout (ORB) Strategy

Another one of the classic core day trading strategies is the Opening Range Breakout (ORB). At the 9:30 a.m. open, heavy trading creates volatile price action. New traders should typically wait for the first five minutes to let the market settle. This initial period is called the 5-minute ORB.

The strategy is to identify the high and low of this opening range. Once the price breaks above the high or below the low, you enter a trade in that direction. The ORB is just an entry signal; you still need to define your exit and stop loss based on other technical levels, like VWAP or support/resistance. This strategy works best with mid- to large-cap stocks that aren’t excessively wild.

For example, e.l.f. Beauty (ELF) gapped up over 19% on good results. In the first five minutes, however, it sold off heavily as overnight investors took profits. Once the price broke below the 5-minute opening range low, I went short and rode it down to the next daily support level for a nice profit.

As you gain experience, you can trade faster timeframes. I now often use a 1-minute ORB, especially during volatile periods. For instance, during the pandemic, I shorted Carnival Corp. (CCL) after it broke its 1-minute opening range low, making a $1,200 profit in just a minute. Properly identifying these setups is one of the fundamentals of day trading.

Crafting Your Own Edge and Building a Business

You can read about dozens of strategies, but true success comes from developing your own method. This is the essence of building a professional trading business. Your trading strategy is deeply personal and must be tailored to your psychology and risk tolerance. I might be a 5-minute trader, while you might be a 60-minute trader. There’s a place for everyone.

The key is to master one strategy first. It could be an ABCD Pattern, an ORB, or something you create. Give it a name—this gives it an identity and prevents you from making unplanned, impulsive trades. I always say the name of my strategy out loud before entering a trade. This ensures I have a plan and I'm not just gambling.

Don’t trade a new strategy with real money until you’ve tested it extensively in a simulator. Practicing in a simulator for a few months, then trading small with real money, is a proven path. There's no shame in going back to a simulator at any stage to refine your approach. This dedication to process is a cornerstone of strong risk management and trading psychology.

A newly successful trader in our community, John, found his edge by focusing on a single strategy: the "Break of High of Day" (BHOD). He realized that trying to trade everything was a recipe for disaster. By mastering one setup, his consistency and profitability soared. His journey underscores a critical point: he learned the basics but then put in the work to find what fit him. That’s how you go from being a student of the market to a professional.

Ultimately, building a professional trading business isn't about finding a magic indicator. It's about developing a process, from your morning routine to how you journal your trades. It’s about having a written plan for every trade and sticking to it with discipline. Trading is a marathon, not a sprint. Focus on developing a set of skills that will last a lifetime, and the profits will follow.