Looking for the best intraday trading strategies? This post covers some of the top intraday trading strategies, including scalping, momentum trading, and mean reversion trading. Discover the benefits and risks of each strategy, and how to implement them effectively to achieve success in intraday trading.
Before diving into the topic we want to explore what is intraday trading. Intraday trading or day trading is a type of trading where buying and selling of any instrument is done in a day and the trader has to close the trade on the same day.
Intraday trading is a major debated topic in the market. Some traders claim that it is not a wealth creator and a risky one. Some other traders prefer swing trading as a better option than day trading. According to me there is no logic in debating whether intraday trading is profitable or not. Every trading style is profitable if it is perfectly executed. It varies from person to person according to their risk appetite, mental health, personality.
If I don't know how to swim in water then water is risky to me. The same logic goes to the intraday trading as well. If a trader learns with skill how to make money in day trading and earns money consistently then it is the most attractive business to him.
To become a successful intraday trader you have to learn some skills as it is tough and skillful game. There are some important and useful hacks about day trading :-
1. Follow a definite trading setup and stick to it. If you are hoping from one strategy to another, your trading skill will not be improved.
2. Deploy only 50% of your capital in day trading. As a newcomer, if you have Rs 1lakh as your capital, use only Rs 50,000 in day trading on a single day.
3. Do not lose more than 5% - 7% of your trading capital on a single day.
4. Do not take risk more than 2% - 3% of your capital in a single day.
5. Always fix how much you are ready to take loss in one trade rather looking for profit.
6. Try to learn how to ride profits if the trade goes in your favour.
7. If a stop loss is hit in any trade, take it sportingly and try to learn from that mistake.
8. Do not look for the profit screenshots of others, it will affect your psychology. Always follow your trading plan.
9. Always remember that trading is a probability game not predicting one.
10. Do not over trade. Maximum 3 trades can be taken in a single day.
11. If you are not feeling well in any day or emotionally feeling weak, try to avoid trade on that day. Market will not go anywhere.
12. Have a plan before taking a trade and a planned exit for each trade.
How to be successful in intraday trading?
1. Technical Analysis
2. Execution of trades
3. Money Management / Risk Management
4. Trading Psychology
All the above steps are related to each other in a cyclical form. Without one the trader cannot make profit in day trading.
1. Technical Analysis: It is a research technique to identify trading opportunities on the basis of actions of market participants. These actions are reflected in stocks charts after sometime some patterns form in these charts and each pattern has a significant message. After analysing the pattern traders develop a point of view.
Technical traders make trades keeping these assumptions in their minds.They believe in current and past price action to predict the future price action in stocks or indices.
2. Execution of trades: There is no Holy Grail strategy in the market. However, in day trading only the execution is the real Holy Grail. We need not to trade each pattern, we should wait for the right setup when comes after confirmation, only then we can make profits. If we want to trade all the patterns in each stock or index without consciousness we will end up in a loss.
So execution of trades on a certain time-frame is the most important part in day trading.
3. Money Management / Risk Management: Money management is a calculated method to diversify the required position size with some specific rules to reduce the risk while targeting for a good profit in intraday trading.
You have to allocate required position size in such a way that you should not lose more than 2% - 3% of your capital when a trade goes wrong on a specific day. So money management or risk management is a vital point which requires a great attention in day trading.
4. Trading Psychology: Trading psychology is the most vital aspect of day trading as it is said by many big traders that a strategy plays only 20% and the rest 80% is the psychology. Psychology means emotion or mental health which plays a vital role in a trader's mindset. So trading psychology signifies sensible factors connected with intraday trading.
By understanding and managing their emotions and biases, traders can improve their chances of success in the financial markets.
Disclaimer: The articles published here is for educational purpose only. We do not recommend any one to invest in any instrument in stock market. Before investing kindly consult your financial adviser.
