Trading within a single session or intraday trading is a way to profit from the normal fluctuations of market prices. While a commodity future, stock, option contract, or Forex pair may provide profits due to an up or down trend, intraday trading allows day traders to profit in a flat market as well as up and down markets. This is because there is a lot more movement up and down in any given trading session than what shows up on a chart at the end of each day.
What Is Intraday Trading
In intraday trading all trades are begun and ended within a single trading session. This is the case no matter if a trader is trading commodity futures, Forex pairs, stocks, or options. While any of these can be traded within a single day, there are issues that make trading commodity futures a more practical and profitable route than trading stocks, for example. Commodity futures are treated more favorably in regard to day trading taxes and are not subject to the pattern day trading rules that stocks are.
Intraday Trading Strategies
Basic approaches to intraday trading are momentum trading, daily pivots, fading, and scalping. Momentum trading works by identifying which way the market is going, jumping on for a profit, and selling before the trend reverses. Daily pivot trading has to do with how the market typically jumps up and down. In this approach a trader commonly buys at what they think is the daily low and sells at the apparent daily high. Fading is similar in that a day trader sells short after an impressive upward move. And, Scalping is making many trades taking positions and selling as soon as there is a profit.
News Based Intraday Trading
In today’s interconnected, internet driven world the news drives the markets. Because stock, option, Forex, and commodity futures traders always seek to profit from future movement, they follow and trade on events that are likely to drive prices. This approach requires the ability to interpret the news based on market fundamentals as well as prevailing market sentiment. At DayTradeSafe you can learn how to trade like professional, entering, managing, and exiting trades most effectively when the news drives the markets.
Momentum Intraday Trading
This approach is based on the assumption that prices that are going up for a good reason will continue to go up and prices that are falling are usually doing so for a good reason and will continue to fall. In this sort of intraday trading the day trader buys or sells and holds the position. They will use technical analysis indicators to help decide when to enter and, especially, when to exit such a trade. This day trader will generally hold positions much longer than a scalper but will still close out all positions before the end of the trading day.
Intraday Trading Trend Lines
Trend lines are ways to visualize whether prices are going up or down. They can represent prices but also moving averages. In intraday trading it is important to track prices in real time and to use a short moving average to be able to see price averages change in real time while smoothing out fluctuation static. Many day traders use both a shorter time frame and longer time frame for a pair of moving averages. This approach to intraday trading trend lines allows the trader to see changes in real time and see overall trends as well.
Linear Regression Based Intraday Trading System
A linear regression based intraday trading system is used to trade in high volatility. This responsive trading strategy searches for breakout exit and breakout entry trades. It is a system that works in real time without waiting for the next bar on your graph to open when your refresh intervals may be set too long to pick up on what this system sees. This day trading system functions like an automated system so in intraday trading the day trader needs to follow closely to assure that it is generating profits and not losses.
Intraday Trading Discipline
No matter which strategy you apply to intraday trading, using discipline to apply that strategy is essential. Too many day traders fail because they treat day trading like a trip to the casino, fall prey to fear and greed, or try to trade in markets when they do not understand what is going on. At DayTradeSafe you can learn the skills of a benchmarked trader, how to apply an exclusive mechanical system, and use rules-based trade entries, management, and exits.