Intraday trading is a particular type of trading strategy that focuses on quick trades. With intraday trading, you’re strategy is to buy and sell stocks within a single trading day. You’re looking for quick bumps, and you also don’t want to leave yourself exposes to overnight changes. Generally, your goal is to lock up small gains, and to then maximize your profits by using leverage, or borrowing from banks.
So what is intraday trading ? It’s a trading strategy that focuses on opening and closing a trading position within one given trading day. You can short stocks and then buy them back at the end of the trading day. Or you can buy stocks, but you just have to make sure you sell them off at the end of the day.
This method is similar to day trading, which also emphasizes starting and exiting a trade within a given day. When you see “intra”, remember that term basically means within. So intraday trading is trading within a given day.
Intraday trading is considered to be among the higher risk trading strategies out there. If you have been studying investing, then you might already know that as risks increase, so too does the potential to earn profits. So yes, intraday trading is risky, but it can also produce tremendous returns.
Intraday Trading Tips and Strategies
There are many intraday trading strategies, but most of them focus on small price movements and leverage. Many intraday strategies are based upon or incorporate technical analysis, or using computers and formulas to uncover potential insights into markets and price movements.
One of the biggest questions most day traders ask is “when should I enter a trade?” If you can enter a trade at the right time, you’re going to have a very good chance of turning a profit. Since prices are constantly moving up and down, this type of quick turn around trading means that it’s often possible to produce a profit off of any asset, if you buy in at the right time.
Many intraday traders set thresholds that they sell at. For example, if a stock rises by 3% or $4 dollars or whatever. It’s often a mistake if you try to wait until the end of the trading day to liquidate your positions.
Further, some intraday traders will hold onto stocks overnight if closing out would mean a lose. This kind of defeats the purpose of intraday trading, but regardless, in some cases it might actually make sense. After all, the purpose of all types of investing is to turn a profit.
For Most, Intraday Trading is a Full-Time Career
Most intra-day traders are full time, fully dedicated investors. Since day trading is considered a higher risk investment strategy, it is important to hone your craft. It is also important to constantly monitor markets and to react quickly. Intraday trading focuses on quick movements and quick reactions, so paying close attention is very important.
It would be unwise in most cases to try to conduct intraday trading, or day trading, or other similar strategies if you cannot dedicate to it full time. It’s also smart to pick a particular sector, industry, or group of stocks to follow closely. Why? Because by doing so, you will be able to increase your familiarity with this smaller group of stocks.
However, you may be able to use certain tools, such as automated trading software, to conduct trades when you’re not around. For example, let’s say you buy some Google stock (NASDAQ: GOOG) in the morning for $825 dollars. You could then set software to automatically sell it should prices reach $836
Before you get started with intraday trading through your broker, you should take some time to practice and hone your strategies with a practice account. There are many places you can sign up for a practice account. These accounts allow you to see how you’d perform trading with hypothetical money.
Practice accounts are especially important when you’re looking to use higher risk strategies. If you gamble with real money right away, you could end up losing a lot of money. On the other hand, if you use a practice account to try out some intraday trading strategies, you can figure out what works. Once you find strategies that work, you can then invest with real money.