THE BASICS OF INTRADAY TRADING
You may be wondering what is intraday trading or, in other words, day trading or how to become an intraday trader. But have you ever wondered what the day of a professional intraday trader looks like?
This article will provide you with details on how to conduct a normal day for the intraday independent trader.
First of all, we must admit, of course, that the self-employed trader had to learn day trading first and therefore take day trading courses, whether they were paid or not.
Intraday trading (“within one day”) refers to the process of selling and buying securities during a single trading day. The people participating in the transactions are called day traders. The most common financial instruments traded on the stock market are: stocks, options, currencies, futures contracts. Price fluctuations are very important for traders who focus on short-term transactions in an attempt to make a profit. There is no limited number of transactions accepted in a single day, just as there is no limit on profit and loss. Some traders pay close attention to price, others to strategies, all looking to find ways to earn. A single trading day can be very profitable or extremely unprofitable, generating huge gains or huge losses. The risks can be accentuated if there is no clear strategy, no routine developed and in the worst case if one is trading outside his portfolio’s budget, on leverage.
Intraday price movements are particularly significant to short-term or day traders looking to make multiple trades over the course of a single trading session. These busy traders will settle all their positions when the market closes.
Actually, intraday trading is often used to refer to the new highs and lows of any particular security. For example, “a new intraday high” means the security reached a new high relative to all other prices during a trading session. In some cases, an intraday high can be equal to the closing price.
RISKS OF INTRADAY TRADING TRANSACTIONS
Although at least theoretically anyone can trade in financial markets, intraday trading is not an activity that can be successfully performed by anyone. You need to have a high-risk appetite, a deep understanding of the risks and mechanisms of the markets as well as a proficiency in trading analysis.
The shorter the trading time, the greater the risk. This is why intraday trading and Scalping strategies are known as very high-risk trading styles. Scalping involves opening numerous positions on 1-minute charts in order to get at most 10 PIPs profit per open position in the market, while losses are maintained at the same level. Scalping involves permanent monitoring of charts.
Because markets can move broadly in a single session, intraday traders use high-risk trading techniques to increase the volume of profits.
These techniques are:
◉ Using a high level of Leverage to try to take advantage of price movements;
◉ Increasing the number of transactions with the same purpose.
These techniques are very risky and for this reason they are not recommended for novice traders. That’s why we offer you consultancy and tehnical analysis for beginners in intraday trading. Just subscribe below to one of our plans.
DOES THE INTRADAY TRADING STYLE SUIT YOU?
In intraday trading whoever wants to be consistently profitable must have the following:
- Significant capital- Intraday traders must have sufficient capital at their disposal and use money management with an appropriate reward-risk ratio.
- Advanced knowledge of financial markets- An in-depth understanding of how the market works and the factors that determine market movements is essential. A successful intraday trader closely monitors both fundamental factors as well as technical indicators. Studying technical and fundamental trading strategies can give you a competitive edge.
- A very strict discipline- The disciplined execution of the strategy is a factor that can make the difference between profit and loss. It is not very pleasant to see the market evolving in the direction you predicted, but you did not place the order in the market at the right time. It takes discipline to accept that you have missed an opportunity, instead of entering the market too late anyway and insuring yourself a loss. Keep in mind that the market does not remember your trades and strategies, they might work the next day,
- A high level of patience – Intra day traders need to be able to have the patience to wait for a profitable set-up based on clear signals from technical analysis. Once the signal triggers, they can enter the trade knowing that they have a defined risk/reward ratio in their favor
- A clear mind – Intra day traders need to be able to detach themselves for a few hours each day from their normal lives and be able to have a clear focus on the task at hand. Relaxing during weekends and exercising are great ways to prepare yourself both mentally and physically for a new trading week.
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