Day Trading Overview
Status: Verified against code Last Updated: 2026-04-13
What Is Day Trading?
Day trading means opening and closing positions within the same trading day. No overnight risk, but you need to be decisive within market hours.
Typical Trade Duration: 30 minutes to full trading day
Key Characteristics
| Aspect | Day Trading Setting |
|---|---|
| Timeframe | 1-minute bars |
| Lookback | 5 days |
| Bars Shown to AI | 240 bars |
| RSI Window | 14 (standard) |
| EMAs | 9, 20 |
| SMAs | 20, 50, 100, 200 |
| MACD | Yes |
Why these settings?
- 5 days of data = recent context without noise
- Standard 14-period RSI = reliable overbought/oversold signals
- Multiple SMAs = identify trend and key moving average levels
Stop Loss & Target Rules
| Element | Day Trade Range |
|---|---|
| Stop Loss | Guardrail: typically $1.00 to $2.00 below entry (STOCKS). Stop should be anchored to support/resistance + volatility. |
| Target 1 | $2.00 to $3.00 above entry (exit 50%) |
| Target 2 | $4.00 to $5.00 above entry (exit remaining 50%) |
| Time Stop | Market close (4:00 PM ET) |
If holding at close → Exit at market before 4:00 PM.
When to Day Trade
Good Conditions:
- Clear trend direction
- Good volume on the move
- Multiple timeframe alignment
- Key level breakout with follow-through
Avoid Day Trading:
- Choppy, range-bound days
- Major news imminent (Fed, CPI)
- Low volume sessions
- Unclear market direction
Asset Types for Day Trading
| Asset | Day Trade Support | Notes |
|---|---|---|
| Equities | ✅ Full | Most common approach |
| Options | ✅ Full | 3-7 DTE contracts |
| Futures | ⚠️ Limited | Price action + volume + session structure |
| Crypto | ✅ Full | Use 8-12 hour time stop |
Day Trading Risks
- Pattern Day Trader (PDT) Rule — 4+ day trades/week requires $25K
- Time Pressure — Must close by end of day
- Overtrading — Urge to force trades
- News Sensitivity — Intraday news can reverse positions