7 Commonly-Used Intraday Trading Strategies

Day traders place multiple trades within a few minutes in intraday trading. They trade numerous times within the same day, and generally, these are high-volume trades. Failing to enter and exit all their positions before the market closes on the same trading day can lead to huge losses due to unfavorable price gaps. They analyze current trends and strategies trades based on minutes and hourly charts. They take advantage of small price movements that exist for the short term. 

Intraday trading can be a lucrative option for passive income if strategies are applied correctly. Day traders need to be disciplined and develop an effective day trading plan to adhere to basic strategies. How long it takes you to witness successful trades will depend on your trading skills, targeted profits, the capital you have, and your final return based on your trading strategy. 

Let us elaborate on commonly used strategies for intraday trading for beginners.

1 . Start small 

Day trades are generally known for substantial-high volume. Traders, especially newbies, need to plan a budget and stick to the assigned limit. They can offer to take small positions with a great focus on finding stocks with great opportunities. To start the journey, it is better to focus on one or two stocks during a trading session. 

2 . Set achievable profit targets

Day trading can offer huge profits, but the success rate is very low. A trader may have earned a profit of 15-20% in a single trade, but it does not mean that everyday trade will bring a profit. One should not take multiple positions with the expectation of unrealistic profits. Place trades with a reasonable and achievable target.

3 . Avoid penny stocks

Stocks available at very low prices attract most traders. These are the Penny stocks. Day traders should not fall for penny stocks unless it is a genuine opportunity based on your thorough research. When you open new demat account along with trading account, look at the quality of research reports provided by the broker as they can help you to choose the right stocks.

4 . Type of order can limit losses. 

Day traders have to exit from the trade in the same trading session. Limit order trades are preferred by most day traders as they are more precise than market orders to trade securities at a willing price.  

5 . Set aside funds for calculated losses 

Intraday traders are ready and capable of taking the risk. They should take a calculated risk on each trade. It is necessary to set aside a surplus amount equivalent to the calculated losses for a day. Experienced traders suggest keeping a 1% – 2% of the trade amount as a surplus to bear the losses. 

6 . Look for low volatility hours.

Traders can consider avoiding executing trades as soon as the markets open. An experienced trader can pick patterns in rush hours that may lead to profits, but a novice may not. Though during the rush hours, traders can find numerous opportunities, beginners should avoid them and wait for the first 15 to 20 minutes to observe the stock market

7 . Avoid margin trading 

A margin trading facility with the brokers seems beneficial. But it can benefit you if you are very sure about your market analysis. As a beginner, it should be avoided as it can magnify your losses. In case your analysis goes wrong and the market brings the opposite trend, you need to bear losses as well as pay the interest in the margin funds.

With these tactics, intraday traders can increase the odds of becoming successful day traders with these common but important strategies. You should have adequate capital and multiple hours every day honing your trading skills over time. You can pick two or three liquid stocks initially to understand how day trading works and then strategize to make your trades rewarding.

Read also:- Pros And Cons Of Long-Term Trading