7 Proven Intraday Trading Strategies for Beginners

What is Intraday Trading?

Intraday trading is buying and selling stocks within the same trading day. Intraday traders make profits (and also losses) on small price movements throughout the day. Unlike long-term investing, where you hold investments for days or weeks, in intraday trading, you close (sell, settle) all positions before the market closes.

What You Need to Know About Intra-day Trading?

These are seven proven intraday trading strategies that can help you gain a foothold in the fast-paced world of intraday trading.

Momentum trading strategy

Go with the flow! Yes, ride the wave when stocks are moving strongly in one direction. rack stocks making unusual moves based on news, earnings announcements, merger announcements, or sector-specific developments When positive news pushes a stock higher with increasing volume, momentum traders buy, expecting the upward movement to continue. The key is entering early in the momentum phase and exiting before it reverses.

Breakout strategy

Extreme price movement in the stock price is rare and circumstantial. Stock prices usually keep bouncing between support (floor) and resistance (ceiling). Any breach in these levels indicates further strong movement. Now, when price breaks decisively above resistance with strong volume, it often continues higher. Similarly, breaking below support signals potential further decline. Identify stocks breaking through their resistance or support levels. These breakouts often signal the start of significant price moves.

Reversal strategy

After moving in one direction for quite some time, stocks often reverse. This reversal onset time can be gauged by decreasing volume, divergences in indicators like the Relative Strength Index(RSI) or candlestick patterns like hammer or shooting star. Identify when a trend is exhausting and about to reverse direction. This high-risk, high-reward strategy obviously requires experience and strong technical analysis skills.

Scalping Strategy

By scalping, traders look to earn many small profits during the day by taking advantage of tiny price changes. Scalpers focus on stocks with high trading volume and small bid-ask spreads. (A bid-ask spread means the difference between what buyers are willing to pay (bid) and what sellers are asking for (ask). They look for small price gaps and trade large amounts to turn small moves (around 0.1–0.5%) into real profits. This strategy requires deep focus and lightning-fast execution.

Moving average crossover strategy

This strategy uses two moving averages to identify when a stock’s short-term trend is changing. You check a fast-moving average (9 periods) and a slow-moving average (21 periods). When the fast average crosses above the slow one, it indicates upward movement in the stock price. When the fast average crosses below the slow one, it indicates future price drops. This strategy is purely mathematical and removes emotional decision-making

Gap-and-go strategy

The main idea here is, trade stocks that open significantly higher or lower than the previous day's close, expecting the gap to either continue or fill. A ‘gap up’ is when a stock opens higher than yesterday's high. A ‘gap down’ is when it opens lower than yesterday's low. These gaps generally result from overnight news or earnings. The strategy is to either trade the continuation of the gap (if strong) or the filling of the gap (if weak).

Range trading strategy

Many stocks trade within predictable intraday ranges. Buy near support, sell near resistance. This approach works best during non-trending market sessions, typically between mid-morning and early afternoon.

Safety rules for intraday trading

Intraday trading can be fast-paced, profitable and exciting, but it also requires careful planning and focus. Here are a few pointers to be kept in mind to avoid the probability of losses

• Manage risk by limiting exposures and using stop losses.
• Venture into actively traded stocks for easy entry and exit
• Protect capital by using only funds set aside for trading, starting cautiously and taking breaks after challenging periods