One Of The Best Short-term Trading Strategies That Work PDF (2024)

The short-term trading strategy is one of the most popular trading approaches adopted by retail traders. This is because it gives you instant gratification. Our team atTrading Strategy Guidescreated this guide to offer you short-term trading strategies that work PDF, where you can enjoy learning about this method.

In this article, we’ll show you how to turn a simple trade principle into the best short-term trading approach. Below, you can read our updated post for the best short-term trading strategy.

Make sure to also check out our guide on Forex trading for beginners!

Is short-term trading not for you? Do you position yourself on the opposite side of the trading strategies spectrum, such as a swing trader? If so, we encourage you to readMACD Trend Following Strategy – Simple to Learn Trading Strategy.

While this short-term trading strategy can be used by only focusing on the price action short-term trading tips, you can modify it at any time. Add indicators to filter some of the false signals.

The best short-term trading strategy is a pure price-action strategy. If you want to use indicators, you need to know how to pick the most accurate indicators for short-term trading. Our team atTrading Strategy Guidesput together a step-by-step guide with the most popular Forex indicators here: TheBig Three Trading Strategy.

Moving on…

Let’s see what short-term trading means.

What Is Short-term Trading?

Short-term trading is a type of trading strategy that seeks to hold a position within a short timeframe. Short-term trading focuses on profits from smaller price changes as compared to the standard buy-and-hold strategy.

Scalping and day trading are the most common forms of short-term trading.

Now, how long is short-term trading?

Usually, in short-term trading, the duration between buying and selling can last anywhere from a few seconds to several days.

Here is something you probably know: Every trading style comes with advantages and disadvantages. So, let’s talk about the pros and cons of short-term trading strategies.

What Are Short-term Trading Pros and Cons?

Without a doubt, the biggest advantage of short-term trading is scalability.

Let me explain:

Due to the effect of compounding, short-term trading can be extremely profitable. This is the main reason why short-term trading is so popular, especially among beginners.

Here are more pros to short-term trading:

• Helps you obtain quick profits.
• Puts a lot of weight on price action, which is at the base of all technical analysis
• You can reinvest your profits.
• If you don’t hold the position overnight, you eliminate some of the inherent risks that come with holding a position overnight.
• Fewer capital requirements.

Now, let’s talk about the other side of the coin and see some of the cons of short-term trading:

• Short-term trading involves higher risk.
• It’s definitely more stressful, and you need the special psychological makeup to cope with that.
• It requires more time, so you’re basically glued to your computer screen.
• You need to get accustomed to the ins and outs of technical analysis.

Moving on…

Let’s see which is better, short-term trading or long-term trading.

Short-term Trading Vs. Long-term Trading

Both short-term trading and long-term trading are perfectly fine trading strategies that aim to achieve one and only one thing. Can you guess what that is?

If your answer is PROFITS, you’re right. No matter what your trading style is, we all “worship” profits. So, there is no right or wrong answer.

Warren Buffet, the CEO and Chairman of Berkshire Hathaway, is probably known as the world’s best long-term investor. Also, the most profitable hedge funds in 2021 are short-term oriented.

This comes as no surprise. So, profits can be made via short-term trading and long-term trading. However, truth be told, short-term trading has the advantage of being able to generate more profits.

Now, we need to clarify one more thing: How to make money in short-term trading?

Can You Make Money Short-term Trading?

The key to making money in short-term trading is to be able to time the market. Now, this might be the case with most financial markets. However, the stock market is a little bit different.

So, how to make money in short-term stock trading?

The best way to make short-term profits in the stock market is to trade around key economic data releases and earnings reports. That’s how you do short-term trading in the stock market.

Here is for you the best way to trade earnings announcements: Earnings Report Trading Strategy – Overcome the Fear of Earning Season.

It’s well known that in the stock market, you can make more money if you stay invested in the long term.

How Does Short-term Trading Work? Short-term Trading Tips!

Follow these five basic steps to get started fast with short-term trading:

1. Pick your short-term trading style (high-frequency trader, scalper, day trader, or swing trader).
2. Choose a financial market where you can trade short-term.
3. Pick the short-term trading strategy PDF.
4. Backtest your system on a demo account.
5. Open a live trading account and start counting the profits.

Next, let’s see what the best short-term stock trading strategy is.

Best Strategy for Short-term Trading

There are so many options available to choose from, including momentum strategies, range-bound strategies, reversal strategies, day trading price action strategies, etc.

So, which short-term trading strategy should you choose?

By the end of this section, we’ll share with you the short-term trading strategies that work PDF download link. The book we’ll share with you is written by Larry Connors, probably one of the best short-term traders on Wall Street.

However, before that, we want to share what we believe is Connors’ best strategy for short-term trading.

Larry Connors’ 2-period RSI is his best short-term trading strategy.

We’ve shared in the past a slightly modified version of Connors’ strategy here: Verge Trading Strategy – Amazing 2-Period RSI Day Trading System.

Now, let’s see how to trade using Connors’ 2-period RSI strategy. You can see the 2 period RSI strategy as a mean-reversion trading strategy:

• Buy signal: The price needs to be above the 200-day EMA, and RSI (2) closes below 5. Buy on the close and exit when the price closes above the 5-period EMA.
• See signal: The price needs to be below the 200-day EMA, and RSI (2) closes above 95. Sell on the close and exit when the price closes below the 5-period EMA.

Here is an example:

Now, as we promised, here is the link for the book: Short-term Trading Strategies That Work Connors PDF Free Download.

Make sure you also check the 5 strategies to time the market from the PDF.

Moving forward…

Let’s see:

What indicator are we using for this short-term trading strategy?

We’re going to simply use a 20-period moving average. The moving average can easily be found on most Forex trading platforms.

So, let’s move forward with the best short-term trading. We will also review a few short-term trading tips that will strengthen your Forex trading knowledge. We also have training on Trend Line Drawing with Fractals if you’re interested.

Steps for the Best Short-term Trading Strategy (Steps for a Buy Trade)

Let’s start with our first short-term trading tip. To understand price action, you have to understand the underlying cause that makes price action patterns work. This short-term trading strategy uses a specific pattern derived from a well-known strategy used by Hedge Funds.

Simply put, the best short-term trading strategy is derived from the Turtle trading system. This system utilizes a 20-day breakout of the price.

If the price breaks to a new 20-day high, one would buy. Conversely, if the stock prices would break to a new 20-day low, one would sell a stock (see Figure below).

The main disadvantage of this strategy is that it loses 80% of the time.

That’s quite bad, wouldn’t you say so?

What we did next was reverse this trading system. We turned it into the best short-term trading strategy with over 80% accuracy. With short-term trading tips, you can use this principle and reverse any losing strategy. Although, make sure you’re backtesting the strategy and see if you can come up with a profitable system or not.

Also, read the simple yet profitable strategy for more trading tips.

Let’s move forward and explain the short-term trading strategy in a simple step-by-step guide:

Step #1: Wait for the Market to Make a New 20-day Low

The way you should count the lows is simple. Each time the market is making a daily low, you can start counting. The rule of thumb is you only count daily lows that are lower than the previously counted daily low.

A picture is worth a thousand words, so here you have an example:

In the above example, we pointed out how to correctly count the daily lows. As we can observe, the market wasn’t able to make 20-day new lows, so we had to stop the count. We started all over again when the market made its first new daily low.

Now, let’s identify a valid 20-day low pattern and see how to correctly trade the best short-term trading strategy.

Please see the chart below:

Step #2: Wait for the Market to Break above the 20-day MA

For the success of our short-term trading strategy, this step is very important. We don’t want to pick tops and bottoms. Moreover, we feel more comfortable entering the market once the price confirms it’s ready to reverse.

Let’s move forward and define our entry point. This brings us to step number three of the best short-term trading strategy.

Step #3: Enter a Long Position When We Break above 20-day MA

As soon as you break above the 20-day moving average, buy at the market. The combination of the 20-day low pattern and the 20-day moving average is the secret to our powerful short-term trading strategy.

Incorporating the 20-day MA in your day trading system is one of the best short-term trading tips you can receive.

We got our entry, but we still need to determine where to place our protective stop loss and take profit orders. This brings us to the next step of our short-term trading strategy.

Step #4: Place the Protective Stop Loss below the Swing Low Prior to the 20-day MA Breakout

The best short-term trading strategy uses a very rigid stop-loss method. The obvious place to “hide” your protective stop loss should be right below the most recent swing low prior to the 20-day MA breakout. If the market breaks above the 20-day EMA and reverses and breaks below that swing low, this means trouble. It is reason enough to close the trade at a small loss.

Why? Well, that’s because it signals the prevailing trend is still maturing and will resume. This is why you don’t want to be in the trade anymore. If you listen to the price action, these are the best short-term trading tips the market can give you.

In the next short-term trading tips, we will learn where to take profits:

Step #5: Take Profit at the 50% Fibonacci Retracement of the Prevailing Downtrend

The logical place to take profits is at the 50% Fibonacci retracement. Normally, that’s the first real target from where the market can reverse. We don’t want to take our chances and risk losing more profits.

So, we’ll liquidate the entire position here for a nice profit.

Note: The above was an example of a buy trade… Use the same rules – but in reverse – for a sell trade. In the figure below, you can see an actual SELL trade example using the best short-term trading strategy.

Short-term Trading Strategy: Trade Example

In the example below, you simply have to follow the sameSteps #1and#2to help us identify the BUY/SELL trade setup and correctly count the daily high/low; follow steps#3through#5to manage the trade.

USD/CAD Daily Short Trade

EUR/USD Daily Long Trade

AUD/USD Daily Short Trade

Final Words

We hope that these short-term trading tips will help you become a better trader. Like every other strategy presented here at Trading Strategy Guides, you have to use strict money management rules. This short-term trading strategy is a perfect example of how one can simply reverse engineer a losing trading system and turn it into a profitable system.Here, you can learn How to fade the momentum in Forex Trading.

If you want to learn more short-term trading tips on how to conquer the Forex market or any other market, we highly recommend spending no more than five minutes and reading: How to Profit From Trading- Make Money Trading Today! This article has attracted a lot of attention from our trading community.

Thank you for reading!

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Best Short-term Trading FAQ

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