10 Incredible Intraday Trading Strategies
Intraday trading is very fascinating for beginners as well as experienced traders. It offers huge opportunities to earn profits from a single trading session. However, intraday trading is not a cakewalk and also involves an enormous amount of risk if you don’t follow the right trading strategies. Therefore, it would not be wrong to say that risk management must be an important part of intraday trading. If the risk management is not good in intraday trading, you will end up making huge losses and in some cases eroding your entire capital. So you must apply various intraday trading strategies that can give your profits on a consistent basis.
Intraday trading is very different from making an investment. In intraday trading, you purchase securities for short term i.e. for the same day. Whereas in investment, you can hold the securities for as long as you want. Since intraday trading involves squaring off the transaction on the same day, the strategies for it are quite different from that of investment. This article will help you in learning some of the day trading strategies that will not only manage your risks but also help you in earning higher returns.
Day Trading Strategies
- Support and Resistance Role Reversal
In the stock market, supply and demand play the main role in determining stock price. Support and Resistance are two limits in a stock price. Support is the price below which the stock does not fall most of the times and resistance is the price above which the stock hardly moves. With support and resistance role reversal strategy you can know the market trend of the stock. If the stock price goes above resistance zone and keeps increasing, this means that stock is in an uptrend. Likewise, if the stock price breaks the support price and keeps falling, the stock is in a downtrend.
- Bullish Engulfing
When a price candle engulfs the body of one or more earlier candles, it is bullish engulfing pattern. Larger the candles engulf the candle covers, the following pattern shall be even more powerful. It is a sign of an uptrend in the stock price.
- Bearish Engulfing
Just like bullish engulfing is a sign of uptrend, bearish engulfing is a sign of downtrend. When you see bearish engulfing patterns emerging, just wait for the fall in the stock price.
- Swing Forex
Swing forex creates a pattern of overlapping bars or candles on a price graph. Here you must be ready to buy the correction when the market swings. To take advantage of this pattern, you have to be vigilant and continuously monitor the price levels.
- Hammer Pattern
Using a hammer pattern can be a successful intraday strategy. Hammer pattern is formed when there is price reversal and the body of the candle is sitting at the end of the next candle. To make higher profits with this strategy, you must place stop loss at higher or lower end of the hammer.
- Long Shadow Pattern
You can make a good trade following the long shadow pattern. In this pattern, a shadow line with different lengths is formed from the closing price on a candle.
- Bollinger Band Squeeze
With Bollinger Band, you can take trade by measuring the volatility of the price below or above the simple moving average. Mr. Bollinger discovered this band. According to him, a period of high volatility shall be followed by period of low volatility. You can expect a big price movement when these bands “squeeze”. It is a buying signal when a full candle completes above the line. It is a sell signal when the full candle completes below the line.
- Moving Average Crossover
Moving average crossover is one of the popular intraday trading strategies. In this strategy, you can set indicators according to your own wish. You would require 20 periods average, 60 periods average and 100 periods average lines for this type of indicator. You must buy when the slow average is crossed above by fast moving average. You must sell when the fast-moving average moves below the slow line.
You can use Heikin-Ashi candles to formulate a trading strategy. This strategy uses the previous candle close and open price.
- Narrow Range
The narrow range is good for short term trading. You can use this strategy to take advantage of the volatility spike. You must buy when price goes above the highest point of the narrow candles. You must sell when the price falls below the lowest point of the narrow candles.
From the above mentioned intraday trading strategies, it can be seen that knowledge about technical analysis and chart reading is very important. You can become a successful intraday trader by learning various technical strategies. You must also remember that intraday trading involves risks and you must know how to manage it well. The best way to lower your risks in day trading is by putting a stop loss in place. Stop loss will not only minimise your losses but also protect your capital. If you are eager to learn more about intraday trading strategies and technical analysis, you can contact Kotak Securities.