Have you ever wondered what Intraday Trading is and why everyone talks about it so much? And how do these day traders do what they do? Fret not! We have got you covered!
Let us first understand what exactly Intraday Trading is.
In simple terms, Intraday trading means buying and selling the stocks on the same trading day. It is done with the help of an online platform like Angel One. One has to specifically mention it as “intraday” while in the portal and that enables the gateway to buy and sell stocks on the same day. Traders do Intraday as their purpose is to gain profits based on the momentum or daily market fluctuations. Hence, it is also called “day trading”.
It is highly recommended by experts to go for a long-term investment for good results as it gives better ROI. The market can earn you the best returns in the short term and it can give you good profits. But every coin has two sides to be flipped. It also depends on the kind of Risk one wants to take.
What are the types of risks?
- High risk
- Medium-High Risk
- Medium Risk
- Medium Low Risk
- Low risk
What are the Strategies for Intraday Trading?
In the stock market, when you buy or sell your stocks in a day is called Intraday Trading. So, whether you buy or sell stocks, you have to square off your position by the closure of the market that day.
Here we have listed down some of the Intraday Trading Strategies-
- Momentum Strategy
In this strategy, one takes advantage of the volatility of the market. The trader buys a stock when it is going up and sells as soon as they tend to fall. This is usually effective at the start of the day or the news, which causes a gain in the volume of trade.
As here, the trader is the leader of the group as he/she is the first one to take out his/her money.
- Breakout Strategy
Breakout trading strategy is something like a situation, where the stock price moves beyond the specified level with the gain in volumes (increasing volumes).
There are two levels:
- Resistance – the upper limit (the upper price level above which the prices can’t move)
- Support – the lower limit (the lower price level below which prices are not expected to move)
- Reversal Strategy
The solution is in the name, as it suggests, a change in the price direction of the stock for eg. if a stock is falling, the upside movement in price is a reversal and vice versa. It is one of the most debated trading strategies.
- PullBack Strategy
This is kind of a short-term version of the reversal strategy. As here, there is a reversal in the short-term trend. Traders earn profits by using these pullbacks. As they enter the stock at pullbacks and book exit and book profits.
- Gap and Go Strategy
This strategy is used when there is a difference between the opening price and the closing price of the previous day. This is one of the most popular trading strategies among intraday traders.
- Bull Flag Strategy
The reason why this strategy is called a Bull Flag is that it is the pattern that forms and looks like a flag when there is an upward trend in the stock price. This can be used in any time frame.
- Moving Average Crossover Strategy
In this strategy, the average price is updated on a constant basis with the current market price.
Now, you must have got a question, how are the price levels determined in the breakout strategy? Well, we have moving averages for the same. They are also known as the backbone of technical analysis, as they form the base for other indicators used by traders.
As a newbie in the stock market, one always has an urge to go intraday because of the early profits. The best tool to be used whatever strategy you may apply is – Stop Loss.
Woah! Along with Intraday Trading, now you know the difference between the strategies of Intraday Trading. Always remember, in the end, one cannot build a long-term future on a short-term basis. So, get rid of the trouble of watching the stock market closely and understand the market. A quick reminder, we have got you covered, Angel One is the best platform to start with trading as it is one of India`s Leading Platforms as a full-service broker and they offer flat brokerage charges.
Hey! Bravo! Let us know in the comments, what do you prefer? Intraday trading or Investing?