Intraday trading as the name suggests means trading within the day. It implies a trade that is closed within a day or two and the traders who enter and exit trades in a particular period on the same day are called intraday traders. The intraday traders buy and sell shares or other instruments by squaring off their trades before the market closes each day. This trading can either be in the form of stocks, currencies, or commodities. In order to do intra day trading, one needs to have a Demat account.
The strategies used for Intraday trading is way different from other long-term trades or investments because of the different factors such as time, value, risk, margin etc.
5 STEPS ON INTRADAY TRADING STRATEGIES
It is said that intraday trading is a type of balancing act that needs dedication, hard work, and the basic knowledge for a deeper understanding. The proper implementation of intraday trading strategies leads to success. Some of the successful intraday trading strategies which can yield high ROI are written below-
- Momentum Trading:
The momentum trading strategy is all about finding when the stocks are moving because the momentum of the stocks is affected by almost 20-30% every day. The main aim of this strategy is to find when these stocks make a big move and catching it. These stocks move with a momentum above the average volume which is affected by certain catalysts like earnings.
- Reversal trading:
Reversal trading strategy is a strategy that gives security along with support. This strategy helps to take support and a position on a level in which an opportunity to set stops can be achieved. Reversal trading tragedy keeps the loss bar low and the success rate high.
- Gap and Go:
Gap and Go is the strategy that capitalizes on gappers which is a kind of security that gives details about the gap between the upward and downward movement of the price. It takes the experience of intraday traders to earn high yielding profits through gaps.
- 4. Bull flag
Bull flag is a strategy in which a pattern is formed every time a strong price moves because of a systematic and diagonal pullback, which forms the pattern of the flag. The bull flag shows a strong price whenever it reaches its highest and then pushes back in an systematic pattern.
- Pullback trading:
Pullback trading strategy describes a short term move in the security in an opposite direction at the end of the long term. In this strategy, weaknesses are bought and strengths are sold which produce a low risk in the trades.
This list of trading strategies is one of the most popular and tested by many traders and there are no intraday trading strategies formulae that can particularly be used.
These are the most commonly used intraday trading strategies India which have a very high success rate. Initially, day trading was an activity that was exclusive to financial firms and professional speculators who either were working in a bank or management. The popularity increased because of the profits that the traders earned because of the trading.