Intraday Trading, as the name suggests, is trading that is completed “within a day”. It is focused on short-term price fluctuations and proves to be profitable if the trader takes the right call at the right moment. However, this needs proper knowledge of multiple aspects, including intraday charts, trading indicators, intraday trading tricks, etc.
Intraday traders use numerous strategies and the top 7 of them are:
1. Momentum Trading
Usually, successful trade results from the “buy low and sell high” concept. Momentum Trading however focuses on the “buy high and sell higher”. In this, you buy stocks that are rising and sell them when they seem to achieve a peak position. It is all about momentum; buy the stocks with potential momentum before they make a big move upwards and sell them when they start to lose momentum.
2. Breakout Trading Strategy
This strategy requires quick, immediate action. When you use this strategy, you enter the market when the price moves outside a certain range, defined support, and resistance level. Then you wait for the break out to close above the resistance level and make a profit with the trade. This strategy calls for a higher risk as you are investing where all other buyers are also investing, and therefore there are hardly any investors left to invest later.
3. Chart Pattern Trading Strategy
This strategy is based on intraday trading charts that signify how price movement is expressed over some time. Different charts like line charts, bar charts, candlestick charts, etc., show you the performance of a stock, and accordingly, you decide when to enter the market and when to exit the market.
4. Reversal Trading Strategy
Reversal trading strategy, as the name suggests, focuses on the reversal trends of the market. In this strategy, your main goal is to pin down when a price is going to change the direction completely and work accordingly. Firstly, you have to identify which direction a stock price is already going, and once you figure out this, you can use different tools to identify when a stock price might reverse. This strategy calls for a little more patience than other strategies.
5. Scalping Trading Strategy
This strategy calls for quick action based on short-term changes. This trading strategy comprises the shortest trading cycle, even shorter than other trading cycles of day trading. While using this strategy, you open a trade and close it as soon as it goes positive. This shows this strategy might be completed within just a few minutes.
6. Pull Back Trading Strategy
A pullback is a price movement that is against a trend, and when you use this strategy, you try to buy in the direction of the trend when the price completes a valid pullback. There are more chances of earning profit in this strategy as you are taking a position in the direction of an underlying trend. However, you should know when to enter and exit the trade. This strategy is somewhat related to the reversal trading strategy, but pullbacks are temporary while reversals are long-term.
7. Moving Average Crossover Strategy
It is a technical trading technique that uses different exponential moving averages of different time lengths. MA (Moving Averages) is one of the best technical tools that are generally used to make trading decisions. They map the average price of a security in a certain period. There are different types of moving averages that involve simple moving average, exponential moving average, weighted moving average and smoothed moving average. Day traders use a 15-minute chart, and this MA strategy is not ideal for long-term traders.
Top traders do not stick to one strategy as market conditions change daily and they choose accordingly. However, if you are a beginner then start with a low amount and stick on to a strategy that calls for the least risk. Slowly you can move on to different combinations.
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