5 Surefire Strategies for Profitable Intraday Trading
Intraday trading involves a lot of risks. But if you take some time to learn a few strategies you can surely make a lot of money. Here are a few strategies that can make your Intraday Trading profitable:
#1: Momentum Trading
This is a strategy where you just jump on a stock when its price is moving up. However, here are a few things you need to look for, before using the momentum trading strategy:
Any unique or major move in price that could be driven by factors such as surprise earnings growth, a new product launch, or a smaller company being acquired by a larger firm
30 to 40 percent movement in stock
Faster trading of smaller stocks because of a reduction in the number of outstanding shares
A stop-loss order is very important in day trading if you want to protect yourself from oversize losses. You should ideally set up a stop-loss order right below the very first price decline. This way, when the stock quote falls down to a particular point, your shares will be sold automatically, protecting you from any further losses.
#2: Scalping Strategy
Every small win adds in day trading, helping you make a lot of money by the end of the day. If you are using the scalping strategy you may have to set your buy and sell targets and stick to those predetermined levels. Buying and selling can happen within just a few seconds in scalping strategy. You will have to make your decisions quickly and confidently, without any questions or remorse. You will have to be disciplined enough to sell immediately when you witness a decline in the price, thereby minimizing your losses. This day trading strategy works only for those who have a razor-sharp focus and do not get distracted that easily.
#3: Pullback Trading Strategy
To use the pullback strategy you will need to identify a stock that has an established trend. Then you will have to monitor this trend until there is a decline in the price. In case the established trend is upward, your pullback would be a downward price movement. This will be your entry point to buy.
You will have to understand the trend of the stock using the technical charts. In an uptrend two successive high price movements are what you may have to look for before the pullback. Similarly if you are looking at shorting the stock, you may have to look for two successive decreasing prices. There are times when the trend completely reverses once you buy the stock. Nevertheless, this is no reason to panic. The trend generally continues in a single direction for quite a long time. It is the pullback candidates that end up making the biggest gains in day trading.
#4: Breakout Trading
A scenario where in the price of stock rises above its former top-resistant price might necessitate a breakout trade. However, it is not like you just buy the stock after a breakout once you have a look at the chart and recognize the resistance. You will have to monitor the number of shares that are changing hands.
Breakout trades generally happen in high volume, especially when the prices are increasing. Lower volume breakouts are more common when the prices start declining below the former resistance levels, which is when it becomes very difficult to make profits. More often than not the stock might retreat once it hits the resistance level in the absence of any catalyst for a strong price movement. When the price goes above this, more and more people will start selling, preventing any further rise in price.
#5: News Trading
Stocks tend to react real quickly to news events. The prices might fall if there is a missed earnings number. If the FDA approves a new drug, the stock might just take off. This is why all the day traders are often stuck to the business news channel. If you want to be a successful day trader you also may want to capitalize on these popular daily stories.
It is better to short your stock during the day if there is any bad news that can reduce the prices. You may then want to borrow shares of a particular stock from your investment firm and sell them. If the prices decline as expected, you can make money by buying back the shares at a lower price. If there is some good news that might have the power to increase the stock prices you can go long by buying the stock outright and then selling it once the price increases.
Not only is day trading fast, it is also extremely risky. If you are a beginner you may need some equity intraday tips or index future tips to make sure you are trading the right stocks at the right prices. The Experts at Real Stock Ideas may help you with all the share trading tips that you may need, through the extensive research and analysis that they do. Sign up on Real Stock Ideas to start making some incredible profits from day trading.