Buying and selling stocks on the same day is called intraday trading. Also, timing and understanding the market are key to intraday trading. If you want to be successful in this fast-paced and dynamic trading style, you need to employ various intraday trading strategies that can help you navigate the market.
Moreover, an intraday trading strategy works only when it's backed by technical analysis, executed correctly, with indicators, and risk-managed well. There are lots of intraday trading strategies out there, each with its own set of rules. However, in this article, we will explore the most effective intraday trading strategies.
Best Intraday Trading Strategy
To make financial gains, you can use the following intraday trading strategies.
The idea behind this intraday trading strategy is to take advantage of market momentum. You need to track the right stocks before a significant shift in market trends happens. Depending on this change, you can buy or sell securities. Moreover, there's a quick decision to be made in terms of investment since data can go up or down depending on external factors. You can hold the security for minutes, hours, or days depending on market direction.
In this intraday trading strategy, you'll find stocks that have broken out of their normal trading range. Alternatively, you can spot stocks that are about to move. Here, the key is spotting price movements. If the stock price rises above the threshold point, buy shares. If stocks decline below the threshold point, consider selling them. In general, this intraday trading strategy is based on the idea that when share prices cross the threshold point, the trend will continue, and volatility will increase at the same time.
There are a lot of risks involved in this intraday trading strategy. Here, you make investment decisions against the market trend, based on both analysis and calculation. Additionally, it is more difficult to execute this intraday trading strategy than other methods. The reason for this is that you need extensive knowledge about the stock market in order to succeed. Also, identifying pullbacks and strengths accurately can be challenging.
Scalping involves making a profit from small price fluctuations. In commodity trading, the method is often used. Moreover, high-frequency traders usually use this method. However, you should keep in mind that fundamentals and technicals alone are not relevant here. In scalping strategies, price action is more important. So, be sure to select liquid and volatile stocks when picking stocks. For all orders, make sure to put a stop loss in place.
Moving average crossover strategy
One of the best intraday trading strategies is moving average crossover. Any time the price of a stock moves above or below the moving average, it indicates a change in momentum. An uptrend occurs when the share price rises above the moving average. In contrast, when stock prices are lower than the moving average, it is called a downtrend. When there is an uptrend, experts recommend buying stocks or long positions. In a downtrend, take short positions or sell stocks.
Gap and go strategy
Using the gap and go strategy, you look for stocks with no premarket volume. The stock's opening price represents a significant gap between the closing price yesterday and today's opening price. A gap up occurs when a stock's price opens higher than its closing price from the previous day. In contrast, if it goes down, it's a gap down. In this strategy, you buy stocks believing the gap will close before the closing bell.
Pivot Point Strategy
It's good to have a pivot point strategy when you're at a critical support or resistance level. By using the low, high, and mean closing prices of the previous day, this strategy analyzes the market trend. It is expected that the market will follow a bullish nature if the previous day's analysis exceeds the pivot point. Conversely, if the previous day's analysis is below the pivot point, the market is expected to be bearish. You can use this to find take-profit and stop-loss levels.
To be profitable, you have to choose an appropriate intraday trading strategy. Some of the most popular and effective intraday trading strategies traders are momentum strategy, breakout strategy, reversal strategy, scalping strategy, moving average crossover strategy, gap and go strategy, and pivot point strategy. Moreover, the reversal trading strategy is one of the hardest because you are going against the trend instead of going with it.
There are different rules and methodologies for different intraday trading strategies, depending on market conditions and trader preferences. Still, choosing the right strategy isn't all that matters when it comes to intraday trading. You need to stay on top of market trends, monitor technical indicators, and adjust your intraday trading strategies.
Frequently Asked Questions
Breakout trading is the easiest intraday trading strategy. You simply act upon the news and watch the market movement to make you good returns.
The best time to trade intraday is 10.15 AM to 2.30 PM.
Scalping is the safest intraday trading strategy.
Momentum Trading Strategy, Reversal Trading Strategy, Breakout Trading Strategy, Gap and Go Trading Strategy, and Moving average crossover strategy are the top intraday strategies.
To make profits in intraday trading, follow the movement of the stock market. Also, when the market is bullish, you can make small profits by buying and selling rather than waiting for the big move.
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