An Overview: Intraday TradingIntraday trading is a trading method that comes into the picture when individuals buy and sell stocks or equities on the same day when they are released. The motive for the same is to earn financial gains; that is, investors square off their financial positions before the market closes with the hopes of earning a profit.Since the time difference between buying and selling shares is very less, the risk and volatility are much higher as compared to regulator equity investments. Thus, it is important that if you are trading, you use reliable intraday trading strategies formulae to fulfill your financial goals and expectations from intraday trading.
Some Intraday Trading Rules to Keep in MindBefore we begin with the discussion of the strategies, here are some rules to keep in mind:
- Research thoroughly to understand which stocks to pick that have high liquidity.
- Identify stocks that are ideal for intraday trading
- Trade with funds that you can afford so that if there is a loss, it does not affect your financial standing
- Plan your intraday trading strategies and stick to them only.
- Make sure to close all open positions.
- Keep track of your financial gains and losses by keeping an accounting book.
Learning About Successful Intraday Trading StrategiesIt is important to note that you must know a number of intraday trading strategies since the success or failure of either of them depends on the market conditions. What might be appropriate to apply on one day might not be that suitable for the next day. Further, the kind of intraday trading strategy also depends on the trading style of a trader.
1. Momentum trading strategy:This intraday trading method is based on taking advantage of market momentum, giving it its name. Investors are supposed to closely monitor appropriate stocks or those they want to invest in before a substantial change in the market trend occurs. Depending on these changes, traders buy or sell assets on the same day. The selection of a stock is influenced by recent events, quarterly profits, takeover announcements and other factors.Momentum Strategy is known to be one of the most successful intraday trading strategies in India and is also a very popular one. However, it is crucial for intraday traders to be updated about stock news and updates. Our platform provides you with recent, verified and authentic information on intraday stocks released everyday.It is also wise for intraday traders to respond in a timely manner because of the many external factors that affect share prices. The time for which they should keep their shares depends on the market's momentum. One way to determine if the momentum or trend is still present is to apply the 50 period simple moving average.
2. Gap and go strategy:When the stock or index opens with a gap up (higher than the previous day's high) or gap down (lower than the previous day's low), this method can be relied upon. When a gap occurs, the stock market displays a potential reversal sign that can be seen by an occurrence of high volume (volume refers to the amount of the security traded during the course of a day.)As the gap opens and you wish to make a profit, you can use this approach to find out which equities have no pre-market volume. Through this, you will know which equities have prices different from their closing prices from a day before. Intraday traders can buy these shares if they think that the gap will decrease before the market closes.The advantages of this strategy as one of the very successful intraday trading strategies are-
- Small losses and big profits
- No need to trade each day