There is a certain level of risk involved in intraday trading. However, with requisite expertise and knowledge, are an intraday trader can easily profit from daily transactions. Here are five critical intraday trading strategies that can help you trade like a pro and make your intraday trading productive.
Momentum trading: Perceptive intraday traders use this strategy. This strategy involves jumping on a specific stock when its price is on the rise. However, you may want to consider a few factors before employing the momentum trading strategy. For instance, if you notice a unique or sudden price movement, it could be offset by reasons such as a new product launch, sudden earnings growth or news of mergers and acquisitions.
Scalping strategy: Every tiny win that you build during your intraday trading can help you accumulate a good deal of money at the end of the trading day. If you wish to employ the scalping strategy, you would have to establish your buying and selling targets and remain firm on those pre-planned levels. In this strategy, buying and selling can take place in a matter of seconds, and, hence, you will be called to make rapid-fire decisions with confidence and without any regrets. You will also need to be disciplined to make a sale instantly if you view a decline in stock price, thus helping to cut down your losses. Scalping strategy requires clearly delineated concentration and extreme discipline.
Pullback strategy: To employ the pullback strategy you will need to recognise a company stock that has a proven trend. Further, you will need to observe and study the pattern until you view a dip in its price. However, if you notice an upward established trend, your pullback strategy would be a downward price movement that will determine your entry point to make a purchase. You may want to use the help of technical charts to measure the trend of a specified stock.
Breakout trading: Breakout trading takes place when the price of a particular share exceeds its former top resistant price. After you purchase the stock on a breakout, you will need to continue monitoring the quantity of stock being traded. Breakout trading typically takes place in high volumes. This is particularly seen when stock prices are on the rise. It is common to see lower volume breakouts when prices start to dip below its previous resistant levels. However, such a scenario can make it challenging to bring in profits.
News trading: Share prices are sensitive to news events. If there is a news declaration on a missed earnings number, the stock prices could plummet. On the other hand, for instance, if a new drug is being approved, its stock might rise exponentially. Hence, you may want to pay close attention to business news in order to capitalise on its reactions in the stock market.
Intraday trading is not only exciting but can also be risky if not handled carefully. If you are beginning in the world of stock market trading, you may want additional advice from professional financial advisors with reputed brokers such as Kotak Securities to ensure you are trading correctly. The five strategies mentioned above along with extensive research and analysis can be your guide in making smart trading decisions.