4 Favorite Day Trading Setups: 
Examples and How to Use 
Them 
 
Day trading is fast, fast, FAST. If you don’t know what you’re doing, you can kiss your 
capital goodbye. 

 
What Is a Day Trading Setup? 
 
You probably already know that ​day trading​ is the practice of purchasing securities 
during a short window of time, normally in rapid purchases throughout a single day. 

 
Benefits of Using a Day Trading Setup 
 
In this world, some ​things you need to know​ include patterns, price action, and 
recognizing the difference between long and short trades.   
 
When you know these things, you make better-informed decisions and take strategic 
action. So, with the right setup, you can reduce your trading anxiety and boost 
productivity. 

4 Favorite Day Trading Setups 

 
The following four setups can help you manage risk and allocate resources. Mastering 
just one of these setup techniques can help you trade with more confidence — and 
hopefully better results. 

1. Day Trading Breakout Setup 

 
Because there are a variety of trade setups, it’s important to choose the strategy that 
best suits your trading style. The better you understand and connect with a particular 
setup, the more likely you are to see results and improve your day trading process. 
 
The following four setups can help you manage risk and allocate resources. Mastering 
just one of these setup techniques can help you trade with more confidence — and 
hopefully better results. 

1. Day Trading Breakout Setup 

 
The breakout trading strategy is popular among many traders, from professional to 
beginner.  
 
The breakout is ideal for monitoring potential losses because you can often see 
immediately when you’re making a wrong decision. And in trading, you always want 
to cut losses quickly! 
 

 
 
2. Trading Ranges Setup 
 
A range-bound trading strategy focuses on sideways price action, and stocks that 
swing back and forth between two prices after they’ve stopped following a certain 
trend. These are referred to as a “range-bound” stocks.  
 
The range trading strategy takes advantage of the percentage of the market that is 
non-trending. For example, if the market only trends 30% of the time, then this leaves 
70% of the market to experiment with. 
 
Trading ranges also consider support and resistance. Why? Because support and 
resistance levels are created when price oscillates. 

3. Trading the Flag Setup 

 
Flag patterns are relatively easy to recognize on charts and follow straightforward 
strategies. 
 
Flag trading can follow a momentum trading strategy, and these stocks are normally 
traded on two- and five-minute time frames. It isn’t just a day trading setup either; it 
can also be applied to swing trading. 
 
If you’re looking for simple trade setups, flag trading could be right for you. However, 
identifying the flags can sometimes be tricky. Fortunately, with the help of a scanner, 
you can often quickly find the stocks that are surging and then consolidating to form 
the flag shape on the charts. Once the price has broken out above the consolidation 
pattern, on high volume, that’s your time to strike. 

4. Triangles Setup 
 
Triangle trading occurs with highly volatile stocks that pause, giving you the chance 
to figure out exactly how you’ll trade it before it starts to move again. 
 
There are three different types of triangles (symmetric, ascending, and descending), 
but they’re all traded according to the same breakout strategy. 
 
Always make sure that strong movement and volatility precede the formation of the 
triangle, then draw the trendline once you see the triangle pattern forming. 
 

Key Points to Keep in Mind With Day Trading Setups 

 

1. Follow Chart Patterns 

 
Before you set out to find great trading setups, it’s crucial that you become familiar 
with reading charts and identifying chart patterns. 
 
While we, as traders, can never predict price action with absolute certainty, once you 
start gauging historical price action from chart activity, you’re taking steps to avoid 
risk, and can potentially increase your reward probability by placing the right trades. 

2. Identify Trends 
 
Identifying trends (like support and resistance) in chart patterns is necessary for all 
day trading setups. To avoid risk and unnecessary losses, keep it simple and trade 
with the trend! 

3. Stick to Your Trading Plan and Indicators 

 
If you switch between setups and change your plans mid-trade, you’re in for trouble. 
Stick to your plan. And if a trade starts working against you, get out immediately. 
 
Also, be sure to take advantage of your indicators. They’re there for a reason and can 
help you to identify crucial trend lines and directions. Use them! 

4. Use a Great Stock Screener 

 
No matter what type of trading account you have, it’s important that you find the best 
trading opportunities each day — to do that, you need ​the right software​.