The most effective intraday trading strategies
Intraday trading can help you earn handsome returns if you stick to a few trading rules and follow one of the strategies. With experience, you can increase your funds and grow as a trader.
Intraday trading has helped make fortunes for those who have intelligently navigated the market. It allows for making profits strategically, and who doesn’t like earning some extra money? With inflation at its peak, an additional source of cash inflow can help you meet your regular expenses as well as make savings. If you are wondering how to ride the wave, then this blog could be a good start for you. Here, we will shed light on how you can generate a consistent income through intraday trading. It is highly profitable avenue if you play smart and stay disciplined.
However, before jumping in, you must understand that intraday trading is not a walk in the park – it can be effort intensive and exhausting at times. Trading will become easier with experience, but it is essential to remain consistent and disciplined. You also have to take some risks from time to time to make gains. Millennials are acing the game and pursuing trading as a career.
Best intraday trading strategies
Based on tested methodologies and backed by in-depth research, market analysts have developed various intraday trading strategies that benefit people with specific capacities and requirements. Here are a few strategies that you can follow to make it big at intraday trading.
Momentum intraday trading strategy
As the name suggests, this strategy revolves around making the best of the momentum in the market. Track the right set of stocks before a market trend abruptly changes. Traders buy and sell securities based on the probability of these changes. The choice of stocks is also based on the latest news, earnings releases, announcements of mergers and acquisitions, etc. If you want to give your best shot at intraday trading, then you must keep an eye on such news and updates before buying or selling. The duration of holding the shares depends on the momentum of the market.
Timing plays a major role when it comes to buying and selling stocks on the same day. Another unique strategy behind winning is to find the stocks that have broken out of the territory in which they usually trade. Traders must identify the threshold points in which the shares’ prices go up or come down. If the price crosses the threshold point, traders generally enter long positions and buy shares. Similarly, when stock prices slide below the threshold point, traders tend to sell shares and opt for short positions.
This high-risk strategy is recommended once you have gained experience. It involves investing in the market trend based on experience, calculations, and in-depth analysis. It is far more complicated when compared to other strategies. Do not opt for the same unless you have sufficient expertise in the field.
The scalping trading strategy involves making profits from small price fluctuations. This is generally used while buying and selling commodities. Traders who engage in high-frequency trading leverage this technique. The fundamental or technical setup is not relevant in this case. Price action is of utmost importance in scalping strategy. When it comes to picking stocks in this strategy, traders must go for liquid and volatile shares.
Moving average crossover strategy
Another popular one is the moving average crossover strategy, which indicates a change in momentum when the stock prices go above or below the moving average. When share prices beat the moving average, it is known as an uptrend. A downtrend is when the stock prices are lower than the moving average. Traders should enter long positions or purchase stocks when there is an uptrend. During a down trend, traders generally enter short positions or sell shares.
The gap-and-go strategy – considered by many as the best strategy for intraday – is aimed at finding stocks with no pre-market volume. The opening price of such stocks reflects a gap between the previous day’s closing price. When the share price opens higher in comparison to the closing price of the previous day, it is known as a gap. It is known as a gap down when the scene is just the opposite. Intraday traders who choose this strategy must identify and buy such stocks, ensuring that the gap must close before the closing bell.
Here are a few good practises to follow in order to optimise your opportunities in intraday trading:
- Plan the trading strategy and don’t switch in between
- Stay patient
- Identify stocks that would suit your strategy well
- Trade with funds that you can afford to lose
- Research well and pick stocks that have high liquidity
- Close all open positions
Intraday trading is a fast-paced and absorbing activity through which traders can earn quite a lot. But you must remain patient and resilient to reap the benefits. You can earn high returns through intraday trading if you are consistent and follow the rules diligently.
The investment options and stocks mentioned here are not recommendations. Please go through your own due diligence and conduct thorough research before investing. Investment in the securities market is subject to market risks. Please read the Risk Disclosure documents carefully before investing. Past performance of instruments/securities does not indicate their future performance. Due to the price fluctuation risk and the market risk, there is no guarantee that your personal investment objectives will be achieved.