Day trading: chart setup for beginners
- Mar 18
- 4 min read
If you have read my articles 'Daytrading 101' and 'trading psychology', you are ready to place your first trade. But for that, you do need a strategy! Without a strategy, you run the risk of placing trades simply by watching the market move and hoping for a good outcome. Basically, gambling!
Strategy consists of analyzing the chart of what you want to trade (stocks, forex, indices), determining your risk/reward, the point at which you make your entry, and then executing this plan.
There are a thousand and one strategies out there now, but as a beginner, I would keep it as simple as possible. Using too many tools and indicators can lead to 'analysis paralysis.' You receive so many conflicting signals that you no longer dare to enter a trade.
I am also a beginner trader myself (since February 1, 2026) and I personally subscribe to the KISS principle.
Keep It Simple and Stupid. My charts are clutter-free and consist only of the necessary indicators I need to determine whether a trade can be placed.
In this short period up to today (18-03-2026), I have placed 80 trades, of which 31 were profitable. The bottom line is that I am still at a small loss. But that doesn't matter! I see it as a learning experience. Before you get better at something, you have to put in the hours. The more often you trade, the faster you can analyze the chart, recognize candlestick patterns, and actively manage your trade to optimize your risk-reward.
There are many strategies, but the basis always remains determining support and resistance. Depending on the strategy, you use different methods to determine those support and resistance levels. In combination with other tools and indicators, this ultimately determines where you enter and exit a trade.
For the explanation, I will base it on Trading View and the tools and indicators used there.
My setup
As I said, my chart is clutter-free. A minimum of indicators that give me enough information to place a trade in combination with support and resistance.
Indicators
Volume
This indicates the number of transactions per candle. As a day trader, you look for stocks with a high trading volume because you are simply short-term in a trade. High volume leads to more volatility (read: more movement within the candle), allowing you to hit your target faster.
ATR
Average True Range. This is the average distance a price travels between the opening and closing of a candle. I use this to determine whether there is sufficient space between levels to place a successful trade. Suppose the space between two support and resistance levels is shorter than the ATR. This means that the price has too little room to move and will likely break through those levels quickly. However, this also means that the price can fall back between those levels just as quickly and then move only slightly between them. In this way, your trade never gets off the ground because there is a high chance that the candles will move sideways instead of making spikes.
VPVR
Volume Profile Visible Range This is an indicator on the vertical axis of the chart that displays horizontal and vertical trading volume over a specific period, visible on the chart. This results in High Volume Nodes (HVN) and Low Volume Nodes (LVN), or peaks and troughs. The highest point of this peak is called the POC (Point Of Control). This is the point at which the price breaks in a specific direction.
This point is often the point at which institutional investors defend their position and thus determine whether a price will rise or fall. Once a price breaks through this level, it enters an LVN where the price can move more freely in a certain direction before hitting the next HVN/POC.
In combination with the right candle pattern, you can place a successful trade here.
Tools
Long/short position
With this tool, you can determine your entry, take profit, and stop loss. This allows you to easily determine your position on your chart and see if it is a viable trade. Based on this tool, you can also immediately place a limit or market order that adheres to the conditions you have set, ensuring you do not risk more than necessary.
Fib retracement
This tool automatically plots support and resistance levels based on the Fibonacci sequence. Personally, I actually only use it when I want to split a 5-minute candle at the opening of the NYSE to determine my stop loss. I then measure the first closed 5-minute candle at 0, 0.5, and 1. The stop loss is then set at 0.5.
This way, a candle has sufficient room to move before it ticks you out of a trade.
Line tool
It is a matter of personal preference, but I actually only use two: the horizontal line and the horizontal ray to draw my support and resistance. I also give them both a different color so I know which level I am looking at.
I use the horizontal ray to indicate the YH (Yesterday High) and YL (Yesterday Low). These are natural support and resistance levels for the day you are trading.
I use the horizontal line to indicate the most recent swing highs and lows. So, candles with a long wick pointing up or down.
You start on the daily chart and then work back to the hourly chart to see if there are levels that have also served as support or resistance in the past.
This is a setup that works for me. I hope you can get started with it. But feel free to experiment yourself, as long as you read up on it so that you also understand what the different tools and indicators do.
Analysis paralysis is lurking around the corner!
In the next article, I will delve deeper into strategies.
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