Intraday trading is a very popular method of trading the markets because you can use it in many different markets and assets and you will be able to find many trading opportunities.
Unlike some other strategies such as higher time frame swing trading, intraday trading will allow you to get in and out of the markets quickly and make many trades. This allows you to find many potentially profitable trades.
In this post we go through exactly what intraday trading is and how you can use three different strategies to make successful intraday trades yourself.
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What is Intraday Trading?
Intraday trading is a trading method where you are entering and exiting your trades within the same session. You are not holding your trades overnight or for extended periods of time.
This way of trading is very popular because you can use the smaller time frames to get in and out of the markets quickly and still make solid profits.
Whilst there are many different strategies you can use to make intraday trades that include indicators and EA’s, in this post we will go through three price action strategies that you can quickly start using in your own trading right now.
What are the Benefits of Intraday Trading?
The reason intraday trading is so popular is because it allows you to find and make many different trades and in many different market types.
Whilst intraday trading is best suited to faster moving markets such as Forex, you can still intraday trade on many other markets.
The other major benefits are that you are not holding your trades overnight or through weekend periods. You are only holding your trades for seconds, minutes or hours and then closing them. You know at the end of the session if you have made money or not. You are not waking up the next day to see what has happened to your trades.
Because you are looking for trades on the smaller time frames you will have many potential trades to make. This makes it a much prefered way of trading for those traders who like to make many trades.
If you are a trader who prefers making less trades and holding them for longer periods, then you may be better suited to trading styles like swing trading.
Is Intraday Trading the Same as Day Trading?
Whilst similar, intraday trading and day trading are not the same.
Whilst both types of traders are closing their trades before the end of the session, the intraday trader is making more trades and holding them for a shorter period of time.
The day trader will normally be picking one side of the market and holding for the majority of the session.
The intraday trader however will be finding and making trades on smaller time frames and getting in and out quickly looking to make profits from the small price movements. The intraday trader will normally only be holding their trades for seconds to hours, not the whole session.
What are the Best Intraday Trading Time Frames?
The most common time frames for the intraday trader are the 1 hour time frame and below.
Using time frames such as the 15 minute and 5 minute time frame allows intraday traders to find many different trading opportunities. It also allows them to get in and out quickly making profits from very small price movements.
What are the Best Intraday Strategies?
There are many different strategies you can use to make intraday trades.
Strategies can range from using indicators and EA’s through to raw price action.
The most common strategies involve using technical analysis and price action to quickly find and enter trades.
In this post we go through three price action strategies you can learn and start using in your own trading to start making intraday trades.
Intraday Trend Trading
Finding and trading with the obvious trend is one of the most powerful ways to start stacking the odds in your trades favor. This is even more so the case when intraday trading.
Trends on smaller time frames like the 1 hour time frame and below can go for extended periods of time. When trading with the trend and not against it you give yourself a chance to make very large winning trades.
When trading with the obvious trend you can use smaller stop losses and you can look to ride the trend for large reward winning positions until the trend ends.
See the example below. Price is in a clear trend lower making lower highs and lower lows. Whilst price continues making rotations the trend continues on and on lower.
Intraday Channel Trading
Channel trading is one of the simplest intraday strategies you can use.
Price action on the intraday time frames will often move into clear channels. These channels can repeatedly be traded from the channel high and low for as long as they continue to hold.
In the example below price has formed a channel that is moving higher. Price repeatedly tests both the channel high (resistance) and low (support).
In this example you could be looking to find trades to go long as price tests the channel support and trades to go short as price tests the channel resistance.
Intraday Breakout Trading
Whilst intraday breakout trading can be riskier, it can also offer more explosive trades.
The risk with intraday breakout trading is that instead of price breaking out, it will quickly snap back in the other direction and create a false break.
The key to intraday breakout trading is finding a major support or resistance level that price has attempted to breakout of on multiple occasions.
In the example below there is a clear resistance level that price has tried to breakout of. To make an entry with this breakout trade you could enter a long trade as soon as price breaks higher and through the resistance level.
The other way you could look to get long is wait for price to break the resistance level and then look for price to rotate lower and make a re-test of the old breakout resistance level and new role reversal support level.
How to Use Successful Intraday Trading Strategies
Whilst there are many strategies you can use to make intraday trades, there are some key concepts you will need to put into play if you want to use them successfully.
No matter what method or strategy you use to make intraday trades you are going to make losses. It is important you are using a decent risk reward level. A good risk to reward ratio will allow you to take on your losses, but still make large profits. If you are using the strategies that we discussed in this lesson such as trend trading, then you should be able to make high reward trades and have a very good risk reward level.
The other thing you will need to take into account is that not all markets are suited to intraday trading. You will need to test out your strategies on different markets. The best markets are the markets that move quickly and allow you to get in and out of your trades quickly such as Forex and Gold / Silver.