Intraday trading techniques include a wide range of strategies such as candlestick chart, candlestick patterns, momentum strategies, and more. Here are essential day trading strategies that you can employ and try if you are looking to earn profits by trading within one day. That’s why you should try a MT4 demo account from Hantec Markets first – a safe environment to practice and experiment before you commit.
Momentum trading
Through the momentum strategy, investors buy stocks when the price is rising. Some important points to consider when employing the momentum trading strategy include:
- A rare and drastic move in price, driven by a sound catalyst such as sudden earnings growth, successful launch, and full acceptance of new product or service, mergers, and acquisition news, etc.
- Stock growth of 25% to 40%
- Little-known stocks that trade quickly due to a decreased number of shares
- Trends or expert opinions on momentum trading from advanced analytical tools and communication platforms by well-reputed brokers such as Kotak Securities
To ensure that you do not incur significant losses, you must set a stop-loss order just below the decline of the first price.
Scalping strategy
The premise behind the scalping strategy is that small profits during the day add up to a substantial amount at the end of the day. A day trader employing the scalping strategy sets a buy and sell target and adheres to the planned levels.
This is a swift strategy where you can buy and sell in a matter of seconds or minutes. Expert day traders generally employ the scalping strategy when they are confident to make instant decisions without regret.
Day traders using the pullback strategy look for stocks that have a demonstrated trend. They supervise this trend until they witness a price decline from the pattern. If an upward trend is observed, the downward price movement -- also known as Pullback -- becomes the entry point for the day traders to begin buying. To understand this strategy and the stock's trend, day traders use technical charts.
When stock prices rise above the previous day's top resistance price, the breakout trade takes place. However, breakout trading is not as secure as viewing the chart, understanding the resistance, and making a purchase after a breakout. It is crucial to carefully observe the level of stock trading volumes or the number of shares that are being transferred.
Pullback trading strategy
Day traders using the pullback strategy look for stocks that have a demonstrated trend. They supervise this trend until they witness a price decline from the pattern. If an upward trend is observed, the downward price movement -- also known as Pullback -- becomes the entry point for the day traders to begin buying. To understand this strategy and the stock's trend, day traders use technical charts.
Breakout trading
When stock prices rise above the previous day's top resistance price, the breakout trade takes place. However, breakout trading is not as secure as viewing the chart, understanding the resistance, and making a purchase after a breakout. It is crucial to carefully observe the level of stock trading volumes or the number of shares that are being transferred.
This is because, according to market experts, breakout trades on high volume are more inclined to be sustainable at the recently-changed higher price than the breakouts that have a little volume.
Stocks generally react to news events. For instance, missed earnings could cause stock prices to plummet; a rise in crude oil prices could affect oil and gas stocks, so on and so forth. By being alert on local and global happenings, you can capitalize on the information.
Intraday trading comes with a high degree of risk and could result in substantial gains or losses in a short timeframe. Although there are no sure shot guarantees that intraday trading can offer you high returns, you can make consistent profits in the long run by learning and applying some of the strategies and techniques mentioned above.
News trading
Stocks generally react to news events. For instance, missed earnings could cause stock prices to plummet; a rise in crude oil prices could affect oil and gas stocks, so on and so forth. By being alert on local and global happenings, you can capitalize on the information.
Conclusion
Intraday trading comes with a high degree of risk and could result in substantial gains or losses in a short timeframe. Although there are no sure shot guarantees that intraday trading can offer you high returns, you can make consistent profits in the long run by learning and applying some of the strategies and techniques mentioned above.
