10 Steps to Build The Best Intraday Trading Strategies

Introduction

Intraday trading is all about precise timing and market understanding. A good intraday strategy works only after technical analysis, practical execution, using indicators and proper risk management.  This article will give you a list of intraday trading strategies. This strategy can be used by beginners to start trading. With regular practice, you can become an expert t this. When doing intraday trading, you should back up your risk with stop-loss limits to prevent loss. You will have to find out your trading style that suits your requirement and temperament. Here is the list of successful trading strategies in India.

10 steps for intraday trading

1. Momentum trading strategy:

Intraday trading strategies are all about finding moving stocks that show fluctuations on an everyday basis. You can find around 25-35% of stocks that show fluctuations. This fluctuation is referred to as momentum. Stock scanners are used to find such stocks. These stocks tend to move above the Moving Average without any resistance in high volume. Momentum in the stocks can be created by a catalyst like earnings but it can also be generated without any fundamental back up. This is called a technical breakout. In momentum trading strategy the traders try to pick up those stocks that move in a single direction in high volume. The profit to loss ratio in momentum trading strategy is 2:1. A trader can hold the stocks for minutes days or hours depending upon the rate of movement of the stocks.
Momentum strategy works best during early trading hours or when the volume is high. If you are alert during opening trading hours, you can make a good amount of wealth through this strategy.

2. Reversal trading Strategy

In reversal intraday strategy, traders look for those stocks that are at extremely high and lows. They have a good chance of path reversal. As soon as the movement of the security reverses, a stop is marked and the traders wait for the securities to hit maximum fluctuation. A trade is executed when the reversal value hits the trader’s estimated limit.

3. Gap and Go Trading Strategy

This intraday trading strategy focuses on gapers. Gapers are those points on the stock chart where there is no executed trading. These points are called gapers. These gaps can be a result of several factors like news hike, earning announcement, or a changed trading strategy of the trader. Gaps occur mostly during opening hours when there are a demand and supply gap. The traders tap into these gaps to make money before they get balanced. In the gapper strategy, the trader looks for a gapper and takes a position towards the direction as a minor trend. When gaps occur in opposite to the minor trend, then the opposite direction is taken with a tight stop loss.

4. Bull Flag Trading strategy

A flagpole is formed when a strong price movement takes place in a direction. When the resistance line breaks, it starts a new movement and the stocks move ahead.  The bull flags are violent in the beginning. This is because it causes breakout and the bear becomes blindside. The bull flag represents a strong price movement in a direction and then there is a pullback in such a fashion that there is a parallel high and low pattern. It takes a lot of time for the bull flag to form and for the formation of the upper and lower line.

5. Pull back trading strategy

A pullback situation takes place when there is movement in the opposite direction of a long-term trend. The pullback strategy saves the trader from losing while he is going by the trend. A pullback should not be confused with a trend reversal. It is said that in the pullback strategy weakness is bought and strengths are sold. A good opportunity to buy a pullback is just after the breakout.

6. Breakout trading strategy

In a breakout market strategy, a trader enters the market when the price goes beyond its own resistance and support. Technical indicator volume is used by the traders to search such a pattern in the market. Breakouts need quick entries and exit. It does not involve waiting. The traders first calculate the breakout price level and wait for the breakout. This is a risky method of trading because after the breakout ends, there is none left for buying.

7. Moving average crossover Strategy

This is a price crossover strategy in which when the price of the stocks goes above or below the moving average it gives the signal of path reversal. You can see the change in momentum when the price of a stock goes from one side of the moving average to the other side. A crossover below the moving average shows a downtrend while the crossover above the moving average shows the uptrend. This is one of the best Intraday trading strategies formulae.

8. Pivot Point strategy

A pivot point strategy is beneficial in critical support and resistance level situation. This strategy is useful in the forex market. The range-bound traders can use it as an entry strategy while the breakout traders can understand breakout levels.

9. CFD strategy

Intraday trading is hectic and generating profit requires a lot of knowledge. But instruments like CFD are a trader- friendly and easy to use. The CFD refers to the difference between the entry and exit points of a trade.

10. Scalping strategy

Scalping is a famous strategy in the Forex market. This strategy focuses on minor price changes. You need to be accurate on timings as the trade duration is small. It is a risk-oriented strategy.

Conclusion

Intraday trading is the most sort after the trading technique. The techniques mentioned above are useful in carrying out successful trades and most. You can follow either of the above strategies to trade. Trading is risky without prior knowledge. It is to be noted that most traders do not put more than 2% of their capital per trade. You should always start with small funds or you will end up dumping your hard-earned money. Use stop loss and position size for risk management. It is advised to practice trading regularly to ace the trading world.

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