Best Intraday Trading Strategies

16 May 2023
4 min read

Intraday trading refers to buying and selling stocks on the same day for financial gains.

In other words, individuals square off their positions before the market closes to earn a profit. That said, in comparison to regulator equity investments, this is riskier owing to higher volatility. Hence, one must implement a prudent intraday trading strategy to fulfil their financial goals. 

Here are a few trading strategies you can check before starting your trade. 

Best Intraday Trading Strategies

Here are some top intraday trading strategies individuals can utilise to make financial gains. 

  • Momentum Strategy

As the name suggests, the basis of this strategy for intraday trading is to make the most of the momentum in the market. This involves tracking the right stocks before a significant market trend changes. As a result, it is one of the best intraday strategy to go for.

Based on this change, traders buy or sell securities. The choice of stock depends on the latest news, the announcement of takeovers, quarterly earnings, and more. 

Thus, intraday traders must study such news regarding stocks on their watchlist and place buying or selling orders accordingly. Moreover, since share prices fluctuate owing to various external factors, intraday traders must make quick decisions to earn returns.

The duration for which individuals hold the shares depends on the market's momentum.

  • Breakout Strategy

When buying and selling securities on the same day, timing is undoubtedly one of the most crucial factors. This best intraday trading strategy involves finding the stocks that have broken out of the territory they usually trade. 

Alternatively, a trader can identify stocks to trade in a new price range. In other words, traders must spot threshold points at which share prices increase or decrease. If the stock prices rise above the threshold point, intraday traders consider entering long positions and buying shares.

That said, stock prices plunge below the threshold point, which is an indication for individuals to consider short positions or sell shares.

The fundamental idea behind this strategy is that the trend will continue when share prices cross the threshold point, and volatility will increase simultaneously.

  • Reversal Strategy 

This trading strategy is associated with high risk. This is because it involves making investment decisions against the market trend based on analysis and calculations.

In comparison to other methods, this strategy is more complicated. This is because intraday traders need to have extensive knowledge of the market. Furthermore, pinpointing the pullbacks and strengths accurately can also be quite challenging.

  • Scalping Strategy 

The scalping trading strategy involves making financial gains from small price changes. This method is commonly used by intraday traders when buying and selling commodities. In addition, usually, individuals engaging in high-frequency trading utilise this technique. 

Individuals must remember that the fundamental or technical setup is irrelevant in this case. That said, price action has a greater significance in the case of a scalping strategy.

When picking stocks, individuals opting for this intraday trading strategy must ensure that they choose liquid and volatile shares. Furthermore, they must put in a stop loss for all orders.

  • Moving Average Crossover Strategy

Another successful intraday trading strategy in India is the moving average crossover strategy. When the prices of stocks or any other financial instrument move above/below the moving average, it indicates a change in momentum. 

When share prices rise over the moving average, it is called an uptrend. When stock prices are lower than the moving average, it is called a downtrend. In the case of an uptrend, experts recommend entering long positions or buying stocks. That said, traders enter short positions or sell their shares when there's a downtrend. 

  • Gap and Go Strategy

The Gap-and-go strategy, often called the best strategy for intraday, involves finding stocks with no pre-market volume. The opening price of these stocks represents a gap between yesterday's closing price.

When the price of a stock opens higher in comparison to the closing price of the previous day, it is known as a gap. However, if the opposite happens, it is known as a gap down. Intraday traders opting for this strategy identify and buy such stocks, believing the gap will close before the closing bell. 

Intraday Trading Rules

Here are some basic rules of intraday trading: 

  • Plan your trading strategy and stick to it
  • Identify stocks that are ideal for intraday trading
  • Trade with funds that you can afford, and the loss doesn't impact your financial standing
  • Research thoroughly and pick stocks that have high liquidity 
  • Keep track of your financial gains and losses
  • Make sure to close all open positions

When it comes to intraday trading, there are various methods that one can opt for to earn returns. That said, it is essential to understand a trading strategy for intraday completely before implementing it to make financial gains. 

Further, individuals must stay updated with the latest stock market news and follow the market trend to make the correct decisions at the right time.

Disclaimer

The stocks mentioned in this article are not recommendations. Please conduct your own research and due diligence before investing. Investment in securities market are subject to market risks, read all the related documents carefully before investing. Please read the Risk Disclosure documents carefully before investing in Equity Shares, Derivatives, Mutual fund, and/or other instruments traded on the Stock Exchanges. As investments are subject to market risks and price fluctuation risk, there is no assurance or guarantee that the investment objectives shall be achieved. NBT do not guarantee any assured returns on any investments. Past performance of securities/instruments is not indicative of their future performance.
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