Successful Intraday Trading Strategies

Successful Intraday Trading Strategies

Intraday trading is a combination of both art and science, with the latter being a set of proven strategies such as breakouts, supports, and relative strengths etc etc. 

To be successful in intraday trading, one must possess discipline in regards to stop losses, profit targets, and capital emotions. The key to success in intraday trading lies in reducing costs to a minimum.

It is important to note that making profits every day in intraday trading is not possible, however, being profitable more frequently can be achieved by adopting a structured approach. 

List of Successful Intraday Trading Strategies that Traders Should Know

1) Using Supports and Resistances of Stocks

 In technical analysis, supports are levels where a stock consistently shows a tendency to bounce back, thereby indicating a buy signal. Remember, different time frames have different support and resistance.

On the other hand, if a stock continually hits an upper level and reverses, it signals a short-term top, providing a sell signal.

Also Read - Most Effective Intraday Trading Strategies

2) Utilizing Supports and Resistances

 In technical analysis, supports are price levels where a stock has a tendency to bounce back from. 

Observing this pattern repeatedly is a sign of the stock taking support and is considered a buy signal. 

On the other hand, if the stock consistently hits a resistance level and retraces, it indicates a short-term top, providing an opportunity to sell the stock.

3) Trading Breakouts with Volumes

 Another way to trade in intraday trading is by identifying breakouts. When a stock breaks out of a range and is supported by significant volume, it can be a sign to trade in the direction of the breakout. 

A reliable breakout is one that is supported by an increase in volume.

4) Higher Tops and Lower Bottoms

 Another way to trade right in intraday trading is to watch for patterns in the stock's price chart, such as higher tops and lower bottoms. 

Consistently higher tops indicate that intraday traders can buy on every dip, while consistently lower bottoms suggest selling on every bounce. 

Confirmation of the trend can be determined when higher tops are also supported by higher bottoms.

5) Volume Imbalances

 Intraday traders can take advantage from the imbalance between buy and sell orders by buying when demand exceeds supply. 

However, caution is advised since hidden and algorithmic orders can appear and impact the outcome. 

This technique should be used sparingly and thoroughly tested before implementation.

6) Buying on Rumours and Selling on News

Intraday traders can use the strategy of buying on rumours and selling on news. 

For example, if there are strong rumours about a company's poor results, a trader can sell the stock intraday with a stop loss ahead of the actual results, then exit at lower levels once the results are announced. However, it is advised to not not use 100% capital for such trades.

7) Overbought and Oversold Zones

 In intraday trading, a combination of charts and subjective judgement can be used to determine when to buy and sell. 

For example, by using RSI indicators in charts, overbought and oversold zones can be identified. 

In such situations, if other factors are supportive, buying in oversold zones and selling in overbought zones can be a profitable strategy.

Also Read - Strategies to Reduce Risk in Investment Portfolio

Conclusion

Intraday trading is a short-term approach that requires traders to manage their risks and continually turn their capital to enhance their ROI. 

Above all, intraday trading is a continuous learning experience.

FAQs

1) What are the top 5 intraday strategies?
Ans - Here are some top intraday trading strategies: Moving Average Crossover, Reversal, Momentum, Bull Flag, Pullback, Breakout, CFD, and Scalping strategies.

2) How can I be successful in intraday trading?
Ans - Successful intraday traders possess the following habits: prioritizing risk management, embracing learning opportunities from mistakes, executing trades with precision, maintaining a positive risk-return balance, setting realistic expectations, and refraining from attempting to outperform the market.

3) What is the golden strategy for intraday trading?
Ans - This is a golden rule of intraday trading. Quite often if you buy and the stop loss gets triggered, the tendency is short double the position. This overtrading will lead you to lose money both ways.

4) What is 9 20 intraday strategy?
Ans - The strategy name incorporating "9:20 AM" signifies the execution time, which typically occurs 5 minutes after the opening of India's share market at 9:15 AM. Similarly, for other countries, the execution time would also be approximately 5 minutes after the market commencement.

5) Which time frame is best for intraday?
Ans - The “9:20 AM” time in the strategy name is the execution time. India's share market opens at 9:15 AM. So, just after 5 minutes, this strategy is executed. For other countries too, the execution time will be 5 minutes after the market starts.