Intraday stock trading strategy

A simple way to pick stocks for day trading is to look for those who go above or below the moving average as it signifies a change in the trend. If.
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It is a fact that a plethora of strategies in trading are flooding the Internet nowadays. People often possess the wrong notion of trading. They tend to think that only those who have a natural talent and flair can succeed in this field. The success in intraday trading or day trading depends upon the determination and discipline of the trader rather than their talent.

Moreover, it has been observed that successful traders treat intraday trading as a process, and the unsuccessful ones always end up buying low and selling high. Having the fundamental understanding of trends and developing the ability to make the best use of it have proved to be a time-tested formula to succeed in intraday trading. Therefore, to know the right strategies for a successful trade, you first need to understand intraday trading. Intraday Trading Strategies or day trading comprises of short-term trades that usually last less than a day.

At times it can even last for as little as a few seconds or minutes. Many often believe that intraday trading is the path to get rich overnight. However, it is a big myth in this field. Not only do the traders require having a practical approach, but they also need to possess emotional intelligence in pursuance of earning profits from this trade. If you are a novice in this field, then it is imperative for you to get rid of all these myths before you begin to trade.

You should not have a false assumption of generating good profits just after a single trade. On the brighter side, it is also true that you can start earning profits in a considerably short period with intraday trading. However, it would help if you put in efforts for months studying the market with dedication, patience, and perseverance to accomplish that. Now that you have understood the prerequisites of day trading let us move on to the most effective strategies of intraday trading. Before you begin day trading, you should know that it is all about momentum.

Your job is to find these moving stocks before they make a big move and be ready to catch the movement as soon as it is made. In the beginning, it can seem to be a daunting task, but worry not, as there are stock scanners which make your job easier. They help you to find such moving stocks. The Momentum Trading Strategy is mostly effective either at the beginning of the trading hours or during the time of a news spike, which brings humongous volumes of trade. With a high relative volume and a no-close resistance, these stocks, having potential momentum, move above the Moving Averages.

In this strategy, as a trader, your sole focus should be on the stocks with a momentum that is moving significantly in a single direction and high volumes. All in all, trading here is mostly done at a profit loss ratio and it is one of those day trading strategies that can bring upon a quick impact on your profits. In this Intraday Trading Strategies, there are gapers, the securities that portray a gap between the prices on a chart. This gap is created when an upward or downward movement in the price is noticed that do not have any trading in between.

There are numerous factors due to which these gaps are created, like earnings announcements or changes in the outlook of the analysts. The seasoned intraday traders make the most use of these gaps when they occur during the time the exchanges open due to a difference between demand and supply. It is imperative to tap these gaps in pursuance of earning profits before they get filled with the establishment of equilibrium. Therefore, using this, traders can make quick small profits with low risks possibilities.

In intraday trading, it is always advisable to buy low and sell high to earn decent profits. With the aid of this strategy, you will get an opportunity to enter the security very close to support. You will be able to set the stops with the help of the Reversal Trading Strategy. Here, you take a position on the security that lies very close to the support level. By keeping the bar low and success rates high, the Reversal Trading Strategy provides you with an excellent risk to reward ratio.

Talking of Intraday trading strategies, being accompanied by an increase in volume, break out trading usually indicates when a trader enters the market when the prices move above a specific price range. Traders often use the technical indicator known as Volume Weighted Moving Average in pursuance of understanding and catching these breakouts. However, one has to be significantly fast and aggressive while applying the Break Out Trading Strategy for entries and exits.

You cannot afford to wait for this strategy. Consequently, experienced traders know it in the very instance whether the trade is going to work or not.

Best Day Trading Strategies

A short-term move in the security in the opposite direction of a long-term trend is called a pullback. With the aid of a pullback, traders get an opportunity to join the trend without following the security. With the aid of the Pull Back Trading Strategy, you are protected from drowning when you are flowing with the trend. To clarify, the pullback here is different from trend reversal. In this strategy, the strengths are sold, and weaknesses are bought. Pulling back the securities that are trending provides low-risk buying chances.

On the other hand, the securities that are down-trending will move up, which makes way for a low-risk selling opportunity. This one is an example of aggressive intraday trading strategies.

Successful Intraday Trading Strategies

A bull flag is a situation where you will get to witness a significant price hike that shoots up and reaches its peak and then in an orderly fashion pulls back. In this situation, the highs and lows are almost parallel to each other. A strategy might suit investors on a given day but might completely fail him on others. Here are some of the most often employed Intraday Trading Strategies:.

Through this strategy, a trader can enter the market at a support level. Every trader would without a doubt love to find a position near the support level. Staying closer to the support level ultimately will help in making higher profits. Traders should look at stocks at extreme ends of the market, i. In case, if the stock sees a decline the trader will have to close his short position so as to prevent from taking losses.

Also Read: Intraday Trading Tips. The Momentum Trading strategy is when an investor purchases a stock after detecting its rise and sells the same when it appears to have attained its peak. Investors take help from intraday technical indicators , usually volume indicators in identifying an upward moving stock for implementing the momentum trading strategy. With just the right move, an investor can make huge profits in under a blink of an eye.

Free Intraday Tips, Tricks and Intraday Trading techniques | Kotak Securities®

The Scalping strategy is hugely popular among currency traders. The whole idea of Scalping Trading Strategy is to make multiple profits throughout the day. The traders who implement this strategy, known as scalpers, look to take advantage of price movements — no matter how small and make small profits that add up to make an overall bigger profit towards the end of the day. Scalpers instead of focusing on winning big on a few stocks, look to win small on multiple stocks.

This strategy is relatively hard to master as it requires an investor to keep tabs on a number of stocks and study their trend.

Intraday Trading Strategy with GAPs

The process of Scalping strategy forex requires scalpers to pick multiple stocks, hold positions for a short period of time, and have an exit strategy to make profits. The scalper trades multiple times a day and requires the ability to find a winning stock on a regular basis. A Breakout Trading Strategy involves a trader entering the market after the stock prices have exceeded past the limits on either extreme ends, which is the support level and resistance level.

Anytime the stock prices move past the support and resistance levels, it indicates market volatility. Usually, the price trend follows the direction of the breakout.


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Prices come down if breakouts occur near the support level and rise in the case the breakouts show up near the resistance level. Investors detect these breakouts with the help of technical indicators. The ideal Intraday Breakout Trading Strategy for an investor would be to take a long or bullish position on stocks closing above the resistance level. Similarly, if the stock prices are about to close below support levels, then the investor should take a bearish position.

The term Pullback refers to the phenomenon of the prices of a financial instrument moving in the opposite direction for a brief period. Usually, these pullbacks cause a lot of confusion for many investors who have a tough time identifying a Pullback from a breakout. Pullbacks are also known as Retracement or Price Corrections.

Having an Intraday pullback strategy benefits the investor as it allows them a better reward to risk ratio. An ideal Pullback trading strategy rests on the assumption that the stocks on an upward trajectory that changed their direction towards the support level will eventually rise. This opens up an investment opportunity for traders who want to sell their stocks. On the other hand, a well-performing stock will eventually have a pullback and thus it is a favorable time to buy the stocks. Gaps are empty spaces that show up on a stock market chart due to a lack of trading activity. Gaps occur between two consecutive price bars.

These gaps are a regularly occurring phenomenon and are caused by some major occurring or announcements. Usually, these gaps show up during the first hour of the trade. The first step of the process for Intraday traders who opt for this strategy is to look for these gaps.

The traders also known as Gappers take up positions after closely observing the trend. If the stock price begins to rise, the investor should take up a long position.