Purchasing and selling shares in a day such that all trade is closed within the same trading day, is termed intraday trading.
These transactions are done with the intent to profit from the financial markets. Such short-term trades not only last for less than a day but sometimes even for a few minutes or seconds.
Even the best stock tips provider in India develops its expertise after considerable years dedicated to mastering this craft. Intraday trading involves requisite strategic skills along with domain knowledge and immense patience. Trading methods applied need to be in sync with existing market conditions which are dynamic in nature.
As an intraday trader, you have to be flexible and adapt yourself to the frequent changes in market scenarios. Facing unexpected challenges is a regular feature. Enumerated are some best trading methods that you as a day trader can implement while trading on the stock market:
Momentum Trading Method
The key to day trading strategy is to cash in on stocks that take a leap in value. There is constant movement so here, the traders target stocks with potential momentum. In other words, focus on stocks that significantly move in high volume and in one direction. This strategy can quickly impact your profits provided you are tuned in from the start of the trading session.
Scalping Trading Method
This strategy often proves to be successful. Here, you sell a stock pick soon after it rises slightly. It may initially appear to be an insignificant gain but when you do it often by investing heavily, it builds up quickly. To limit your chances of losing out, follow a strict exit plan.
Technical Analysis Method
Traders use technical analysis to predict the movement in the stock market. The available data, trading history, and stock charts help you determine whether a particular stock progresses or reverses its direction. You may adopt multiple technical indicators to figure out the direction stock prices move in within a few hours or even minutes.
You May Read: Steps to Build an Automated Forex Trading System
Gap and Go Trading Method
Some securities show a movement in prices and no occurrence of any trading in between. This results in gaps usually observed within the initial hour of trading owing to the disparity in demand and supply. As a trader, you watch out for these gaps and take a position with the intention of making quick profits. These gains although small come with very low risks.
Bull Flag Trading Strategy
A strong price move in security forms the flagpole while a subsequent diagonally symmetric pullback forms the flag. When an explosive hike in price reaches its peak and thereafter pulls back such that the highs and lows run almost parallel. This situation is referred to as a bull flag. You need to have immense patience as you wait for such flag patterns to form.
Pull Back Trading Strategy
A short-term move in security headed in a direction opposite to a long-term trend is termed as a pullback. This method helps traders from drowning as they swim with the trend. Under this strategy, you need to observe volumes and take a look at the previous trading day. Here, your strengths are sold and weaknesses are bought.
Breakout Trading Strategy
A breakout occurs when the price fluctuates outside a set price range. As a trader, you need to be quick to adopt this method as the entries and exits are aggressive and swift. There is no waiting period involved and you can figure out right then whether the trade works in your favor or not. Yet, this can be a risky proposition.
Use the correct strategy at the time best suited for it.
You May Read: Ascending & Descending Triangle Pattern