If you are into stock markets, you must be acquainted with the term intraday trading. However, you may not know how exactly it is executed. We’re here to help you with some well-known strategies for intraday trading.
The act involves purchasing stocks and then selling them on the same day to make financial profits. So, you would need to square off your available position before the trading session for the day gets over.
However, this type of trading is not remotely as easy as it sounds. For instance, a range of factors needs to be taken into consideration to earn decent returns.
Before you start with it, you need to be aware that intraday trading requires a specific mindset to handle extreme volatility. In addition, you also need to assess your risks before you begin this journey
We have compiled a list of some of the best strategies for intraday trading that you can try out.
Also Read: The 7 Best Indicators for Intraday Trading
Intraday Trading Strategies
You must bear in mind that strategies don’t offer assured success on their own. A lot of factors like market conditions influence their success ratio.
Traders can try multiple strategies and be flexible in their approach to understand which one, in particular, may work for them. That being said, let’s walk through the strategies that we consider to be better than others and how to implement them.
The Reversal Strategy
Reversal trading is an effective but controversial strategy as it involves investing against trends. However, it is profitable too.
Investors are required to identify the pullbacks and what their strengths are correctly. For example, in the ongoing bullish trend, if there is a pullback from the highs, then you can profit by shorting the stock in the intraday timeframe.
PC: investopedia.com
Correctly identifying the trend and pullback is the key here. In simpler words, sound market experience and an in-depth understanding of charts are needed for this.
The Moving Average Crossover Strategy
A stock price trend is determined by its moving average, which can be short-term or long-term.
If a stock goes below or above its moving average, it denotes a change in its trend. You can use moving average crossovers for your trading decisions in the intraday timeframe
The Bull-Bear Flag Strategy
When a stock price rises rapidly, it reaches a peak. This rapid rise, in turn, creates a pullback that runs in a symmetric but diagonal manner. When you look at it closely, this looks similar to a flag-like impression.
PC: https://www.beanfxtrader.com/flag-patterns/
When a pullback of this nature occurs, it creates a parallel of highs and lows with lots of profit-earning potential. Traders would have to be patient about this.
The Gap And Go Strategy
If the opening price is higher or lower than the day before, it is called a gap up or gap down.
Such a gap is mainly created by what is called a news catalyst. As a day trader, you would need to be on the lookout for those stocks with decent market volumes. Once you see any such stock that gaps over from the previous day’s closing, you can bet on it.
The Gap And Go strategy is a winner in the sense that it allows you to win considerable profits without having to undertake a lot of risks. All you need to do is be observant and quick to take a call.
Also Read: The Ultimate guide to Intraday Trading
Final Words
The strategies for intraday trading that we have listed can be used to maximize your profits.
However, please be aware that the market is unpredictable and involves a certain level of risk. Even seasoned traders are not able to predict trend changes with absolute precision.
Apart from that, make sure that you create your trading account with a trustworthy broker which offers decent leverage on intraday trading. You are good to go as long as you bet on an amount you are ready to lose and keep a lookout for price imbalances.