Intraday trading refers to a type of trading strategy in which investors buy and sell assets all within a single trading day. In other words, by the time the trading day comes to an end, all of the assets have been sold off. Some unscrupulous investors have used this trading strategy in order to engage in rather unsavory activities. This is because the reporting standards for intraday traders is, in some cases, not as extensive as it is for other investors. Many investors, however, use intraday trading for perfectly legitimate purposes.
Investors generally view intra-day trading as a higher risk type of investment. That’s because traders are looking to lock up gains quickly. Often, keeping assets overnight is simply too high of risk for many intraday traders. That is why they frequently sell off before markets close. This way, investors can sleep easy at night, not worrying about what changes or conditions could lead to them losing money. As you can imagine, trying to live your life, get sleep, etc. while being exposed to higher risks can be very nerve-racking.
So what is intraday trading? It’s a trading strategy that requires people to “square off” within a single trading day. This means you’ll both make a purchase and then sell off your assets, all before markets close in a single day. Intraday trading strategies usually involve some component of technical analysis. With technical analysis, traders are more considered with price movements and trading volumes, than they are with the underlying value of an asset.
Some Basic Intraday Trading Tips
Let’s go over some simple intraday trading tips. The first thing to remember about this trading strategy is that it is a higher risk type of investment. This is essential because risk is very important for investors. When engaging in higher risk investment choices, it’s a wise idea to limit your exposure to risk capital.
So what is risk capital then? This capital refers to money that you could afford to lose. In other words, if your investments turn sour, you won’t go bankrupt, or lose your house, or anything dramatic. If you are investing in higher risk assets, it is a wise idea then to limit yourself to risk capital.
Another smart idea is to study up on technical analysis. Since you’ll be looking for rapid price movements, technical analysis can be very useful. With this type of analysis, you will rely on a variety of tools to monitor stock markets. This is essential because rapid price movements can be hard for individuals to track. This is especially true if a large number of stocks, options, or other assets are being watched. Luckily, traders can use some tech analysis tools to provide general oversight.
Most of the time, intra day traders work full time. Since risks are so high and the strategy involves rapidly evolving and changing markets, it’s important to pay close and constant attention. If you cannot dedicate a lot of time to watching over your portfolio, it might be a wise idea to select a different type of investment strategy.
With intraday trading, the tools you use are often very resource intensive. This makes it more important to have access to good software, and also specially developed trading computers. These computers are designed to handle large workloads, and to be resistant to crashes.
What Types of Assets Can Be Traded Intraday?
Just about every type of asset can be traded intraday. Stocks, bonds, there are even methods for intraday options trading, as well as futures and other types of assets. So long as an asset can be bought and sold within a single trading day, intraday trading methods will work.
One thing to consider when looking to engage in intraday trading are the trading volumes. Volumes are important to pay attention to because you need to watch to make sure that there is going to be enough demand for you to sell off your assets. If you try using intraday trading to buy and sell an asset, such as a stock, that no one else wants to buy, you might find yourself stuck with your stocks at the end of the day!
Don’t let us scare you off, however, intraday trading methods are a great way to make money! Still, we recommend that you study up on such trading methods due to the higher risks involved. Also, make sure you watch out for fees, as they can add up quickly when you are conducting rapid trades.