Intraday or intraday trading. What strategy should a trader choose? Intraday strategies Intraday avant-garde commission
Intraday - trading in which deals are opened and closed within one day. As a rule, such trading is called short-term, although it is difficult to generalize here trades that last, for example, 10 minutes, and positions that are closed after 10 hours.
Intraday Forex trading is very popular. It allows you to conclude a large number of transactions even when working with only one currency pair. As a rule, in order to engage in intraday trading, a periodic presence at the terminal is required, which not all traders can afford.
If a person is at the computer during the day or has the opportunity to constantly use the terminal, then this type of trading will be possible. If a person cannot follow the development of events in the market, then intraday trading will be available to him only when using a special automatic system in his work.
Advantages of intraday trading:
- there is no need to follow events that affect the long-term development of the market
- you can earn more on one trend than with medium-term trading. This is due to the fact that an intraday position can be closed when a short-term market correction begins, and then, when the price resumes in the direction of the global trend, re-enter a deal at a more favorable rate
- a novice trader will gain trading experience faster than with long-term trading
- the spread begins to play a more important role than in long-term trading. The share of the spread will be more significant against the background of the transaction results in points
- you have to spend more time at the terminal in order not to miss the moment to open or close a position
On the other hand, news that tilt the market towards a gradual drift in one direction in the long term is more appreciated by fans of long-term trading. The very moment of the news release can be a good opportunity for intraday trading.
Objectives of all deals when trading intraday small ones, as a rule, amount to several tens of points. This allows you not to leave an open position for a long time, which means you do not worry about the market reaction to news that should come out tomorrow or in a few days.
Of course, you have to carefully monitor what is happening on the market so as not to miss the signal of your trading system. The situation changes too quickly if you look at it through small time frames. As a rule, intraday trading is carried out on TF \u003d M5 or M15.
Intraday is often considered a difficult type of Forex trading. The point is both in the greater share of spreads in relation to the results of transactions, and in the haste that often accompanies such work in the market. Many traders argue that it is safer and more profitable to conclude long-term transactions, moreover, this will require less attention from the person, and therefore not so much time at the terminal.
We have already said that traders have many trading styles. You can say how many traders, there are so many strategies. Indeed, even the same tactic in different hands will look different, with its own nuances.
We've already discussed general ones. In this article, we will talk about longer trading - intraday trading, which is called “intraday”.
Intraday or intraday trading - a very broad generalization, but there is a unifying rule: transactions are not carried over to the next day.
What is intraday?
The “intraday” style is conventionally divided into “active” and “positional”. Active intradayaims to capture movements within one trading session and can assume both movement along with the price impulse, and against it. Positional approach may involve opening a position before the European (or even Asian) trading session and holding the position until the markets close (up to 3-4 hours of the American session).
The intraday trader does not need to instantly react to microscopic imbalances between supply and demand (as is the case with scalping), so he can use a traditional candlestick chart with or without volumes. therefore almost all markets are suitable for intraday trading with some reservations.
The best market for intraday strategy
The best markets to trade intraday will be those that generate smooth and powerful trend days, at least from time to time. The market must have sufficient liquidity (for the correct execution of transactions and keeping the risk at the proper level) and volatility.
Is the cornerstone for day trading success. There are traditionally more and less volatile markets, but volatility sometimes appears where it was not expected, for example, on the USDRUB currency pair in March 2018.
It also happens that markets that previously showed high volatility lose it over time, for example, bitcoin; while others, on the contrary, are increasing, for example, oil in 2018. therefore intraday traders migrate from one market to another, choosing the one on which is now the greatest opportunity for profit.
It is important for an intraday trader to keep abreast of the market sentiment and know what ideas and tools are “in play” now. We are not talking here about technical analysis, but about understanding the so-called “stock market sentiment”. What market are they talking about in the news now? Which market reflects the growing uncertainty and fears of investors?
What and when do intraday traders trade?
There are also traders who stick to the same market. Their task is to change trading tactics in time and synchronize with changes in volatility (and other parameters) of their trading instrument.
- If we talk about statistics in general, intraday traders often trade on an oil futures (CL or Brent)... Oil often shows sharp directional movements that continue throughout the day.
- Stock Index Futures more often they trade actively within one session, less often - positionally.
- Gold - a more complex market for intraday work.
- Efficiency of trading in currencies ( Forex) largely depends on the volatility of the instrument and the skills of the trader. In general, currencies are a rather difficult market for intraday trading.
It is permissible for an intraday trader to work in the first hour of the opening of the trading session and then hold the position throughout the day, adjusting the protective stops. A profitable position, of course, requires attention and management. Often traders are faced with situations where the accumulated profit instantly disappears due to a sharp counter movement.
Features of intraday work
If a scalper tries to achieve a smooth growth of the balance curve, then an intraday trader builds the profitability of the whole month on several big days (often, no more than 3-5), while the rest of the time he manages risks and keeps the trading account afloat.
Sometimes this can lead to emotional burnout: intraday traders quite often violate trading discipline and end up on tilt. Errors in trading are sometimes painful, the price captures a short stop and then moves in the direction of their original forecast.
Think and assess realistically whether you can trade within the day, whether you have the required level of psychological stability. Fortunately, it is quite simple to assess this: this style of trading does not require a high entry threshold and you can start with a small amount.
Recall that earlier we talked about. In the following articles, we'll talk about positional trading and swing trading.
Read about trading and financial markets in our
Can combine these two time frames to create a logical trading plan.
Are you an intraday or swing trader? In your trading, you can logically combine both of these styles, because they are not mutually exclusive.
- You need to learn how to trade intraday before you start swing trading.
- Intraday and swing trading are interrelated.
When a trader first decides to start swing trading, they often do not have a proper understanding of the first fact. He trades incorrectly within the day support and resistance levels and then, if by the time the session closes, he shows a loss, he often leaves it overnight. This is a classic mistake!
As for the second fact, often finding strong levels for swing trading, new levels formed within the day are not taken into account. In other words, the trader is not adjusting his limit orders, so most of his swing trades will fail.
Stocks are the most suitable for swing trading. This is because of all securities, they are the most transparent and have no expiry date or intrinsic value. As a trading instrument, stocks are best suited for a system like the one presented in this article, which is based on key price levels. For example, if the price of a share goes 15 cents in both directions, then the value of your share remains equal to par.
The best argument in favor of trading stocks is that they are the safest of all securities and the easiest to learn, especially for non-professional traders. Options and commodities are much more complex. You must first learn to crawl, and then walk.
Swing trading stock strategy
You should trade the same stocks every day, no more than 10. They should be in the price range from $ 100 to $ 250. They should be traded for the same reasons that Wall Street trades high-priced stocks: they seem unlimited enough to provide fast and sustained execution, and partial executions are less common. These stocks also have the highest volumes, delivering consistent and predictable volatility , which is very useful for the formation of reliable support and resistance levels. Conversely, the worst stocks are those that trade in a narrow range or sideways.
Here is a brief description of the technical analysis and trading strategy. Support and resistance levels should be determined, as a rule, on the basis of daily and minute candlestick charts. Levels (swing and intraday) are based on price levels and not on lagging or leading technical indicators such as stochastics, moving averages, or moving average convergence / divergence (MACD). The core of the trading system is a focus on technical graphical analysis, but the emphasis is on learning to correctly position support and resistance levels in real time using real price levels. In fact, experienced traders have no less than a hundred rules and procedures that they follow when choosing levels and entering and exiting trades, often this adherence to the rules occurs on an unconscious level, which implies a great experience of the trader. Most novice traders recklessly place too much emphasis on, to the detriment of procedural trading tactics. For example, it is very useful to use hotkeys to execute orders directly from Level 2. In many cases, the trade turns green for only a second. Will you take this one or miss it just because you weren't fast enough? Hotkey execution of orders requires skill and coordination of movements and gaze. Practice makes you perfect!
It is fashionable to call the trading system presented in the article trading of reversals against the trend. I never unnecessarily try to predict the direction in which the price may continue to move in order to "roll" and earn. Instead, you should always look for an entry (short or long) when a previously established support or resistance level is broken. And then, when the price passes the breakout level, enter the trade. The strategy is counter-trend because we go long when support is broken and short when resistance is broken. A reversal occurs every time the trend pauses and reverses enough to make a small profit. Keep in mind that you usually don't need to enter a trade until the price has passed $ 1.00-2.00 for intraday trades or $ 5.00-10.00 for swing trades.
Never try to predict what Wall Street will do with levels and trends. Just stand on the sidelines, expecting a lot of traffic - up or down. After breaking the key level, we enter to take profit from the inevitable and almost guaranteed "reversal". The reversal trading system is surprisingly conservative when you consider that you have to not only wait for a strong level to be broken before entering, but also let the price pass $ 0.25-0.50 of support / resistance before opening an intraday trade. And when performing a swing trade, you need to let the price pass $ 0.50-1.00 from support / resistance. Thus, the probability of a small price reversal, allowing to take a quick profit, is very high.
Intraday or?
For you to better understand why you need to first learn how to trade intraday, and then swing, and why these two types of trading should be considered in conjunction, we will briefly describe each of them. It was said above that if you are trading intraday, then you should not leave positions overnight. Another important difference between these two types of trading is their profit potential. Intraday trades tend to be less profitable than swing trades. This is especially true for the system presented here.
For example, for intraday trading, we take 15 cents for each position of 100 shares, and for swing trading - from $ 1.50 to $ 2.00. This makes a profit of $ 15.00 per 100 shares for every intraday trade and up to $ 200 per 100 shares for every swing trade.
The trading system allows you to take positions within the day up to 300 shares. This means that with it you can make a profit of $ 45.00 per 300 shares. The intraday system is based on a three-thirds formation strategy. Basically, there are always at least three levels that can be traded during a trading session. After entering the first position of 100 shares, the price will either reverse to bring you 15 cents of profit, or go against you and reach the other two key support / resistance levels and then reverse to bring you 30 or 45 cents in profit.
The intraday strategy requires only a one-minute candlestick chart to recognize the intraday support and resistance levels. You also need to use the daily candlestick chart to identify key pivot points. They can be called "past levels", i.e. formed before the market opens.
Day trading formations are much more diverse than swing trading. The average trader usually makes 5 to 10 two-way trades on each stock in each trading session; if he has up to 10 securities, which he watches, and which can always provide good entry points. These small 15-cent profits add up! As mentioned, you need to trade the same stocks every day. Some of them can be traded throughout your trading career, which will allow you to thoroughly study them and understand what the slightest price fluctuations in these securities indicate. Consistency is key!
This trading system works best with the market open from 9.30 am to 11.30 am. This is the two-hour interval with the most activity. More than 75% of all formations occur at this time. Therefore, if you plan to trade within the day, you need to do it only during this period of time. Your intraday trades should be viewed as additional income while signals for more profitable swing trades are expected.
Undoubtedly, the most visible difference between swing and day trading is risk. The risk of holding a position overnight requires at least a lot of experience and dexterity. This risk is certainly offset by the higher profit potential per trade, but this only works if you have a consistent system with structured entries / exits.
Unlike the intraday system, the swing system has no limit on the number of shares in a position. The emphasis in a swing trading system is on how many shares and at what price will be recruited. To avoid a terrible margin call, it is important not to overnight margin. This minimizes the risk of receiving premature stop loss, sometimes literally 10 times. You can't keep your margin overnight, because some swing trades can go 5-10% into the red zone before turning towards your target profit. If you get, you will have to close most of your positions before price moves your way, which is always a bad thing.
Now that you know the difference between intraday and swing trading, you can understand why it is better to master intraday trading first. The obvious reason is risk. You need to learn how to use the trading system on a manageably small scale before trying riskier swing trading and leaving overnight positions.
Daily chart
When starting the study of intraday trading, you should always focus on the past levels, including the levels obtained from the daily candlestick chart. This should be done as traders inevitably gravitate towards trading with more profitable swing levels. To avoid disaster, you first need to master the basics.
Even if you only want to trade swing, you should still make a certain number of intraday trades, because the signal to enter a swing trade sometimes takes five days. During this time, you can trade intraday. Intraday formations appear daily throughout the trading session. This gives you the opportunity to execute multiple trades with little profit. Intraday trading keeps you on the lookout for daily levels while you wait for swing signals to appear.
This article began by arguing that day trading and swing trading are interrelated. For example, an intraday trading system uses a one-minute chart as well as a daily candlestick chart, which is used to identify swing formations. Therefore, the daily chart is the main one in this bundle. Daily candlestick levels are key for both intraday and swing trades.
Picture 1
Figure 1 shows an example of a LinkedIn daily candlestick chart (LNKD). There are several daily support / resistance levels that are not shown. We only note the level 179.35 (March 5, 2013), because on June 18, 2013 this price was affected at the premarket. The level 179.35 can be used for both intraday and swing trading. Note that the 179.35 level on the daily chart in Figure 1 can and will change; therefore, it is likely that it is no longer relevant.
Now let's take a look at the one-minute premarket trading chart. The premarket session (from 8 am to 9.30 am) is the most underutilized and / or misused trading period. Depending on various factors, your intraday and / or swing trades should be adjusted at the last minute before the market opens, and certainly before the static from previous days kicks in.
Figure 2
For example, in Figure 2, the system shows a swing short entry when the price hits 180.35 (past $ 1.00 past $ 179.35 daily). During pre-market, the price reaches 180.95. If you just place a limit order and take your mind off the trade, you will get an execution at 180.35 at the market open at 9.30 am. According to the system, you need to adjust the trade in real time to the level of 181.45 (180.95 plus 50 cents after passing the resistance level - the high of the premarket). Then your short entry would be $ 181.45 for both intraday and swing trades. Without this combination of both trading styles, the swing entry would differ by $ 1.00, or more in most cases.
In Figure 2, you can see an actual trading formation that demonstrates the importance of knowing intraday levels when placing swing trades. The price broke the resistance level of 180.95 (premarket high) and went another 50 cents to 181.45, shortly after that there was a quick 15 cents for your intraday trade. Later, in the same trading session, you will take in $ 2.00 of the swing trade.
Some traders, looking at this chart, will think that the premarket does not matter, since the price has pulled back and made a profit anyway. This hindsight is the reason why many traders fail to trade consistently. No one could have known what would roll back and give profit after 10 hours, but one could be sure that the resistance level at the premarket, with a high degree of probability, would help to enter a profitable trade. This is what can be successfully done intraday swing trades.
Several rules of the trading system
One of the essential rules of intraday trading is that you cannot have two support / resistance levels within 25 cents of each other. Since when trading stocks from $ 100 to $ 250, levels must be removed by at least 25 cents. For example, if there is a low of the day (support) at $ 200.20 and a premarket low at $ 200.00, then you need to take the lower one. In many cases, you will have more than two levels within 25 cents. Always choose the most conservative option. If you don't pay attention to the premarket levels, it will be bad for your intraday and swing trades. This is especially noticeable after the release of the report in stocks. It is better to wait for the report release in the morning and never leave the position if the report is expected to be released after the trading session.
The main reason to use a stop order (if necessary) is if my swing trade would still be in the red before the report was released. One of the basic rules when swing trading is to never enter a swing position two days before the report. This rule alone will save you from many disorders.
Trade according to plan
There are many reasons why day trading and swing trading are not mutually exclusive. Here is a general idea of \u200b\u200bwhy you should start with intraday trading and then move on to swing. We also looked at the relationship between these two styles. The only way to speed up the learning process is to have several rules and procedures, adhere strictly to them, and choose the right entries and exits for intraday and swing trading. Once you have clear rules, you can confidently make entries and exits.
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Let's look at the question of what it is and is it worth doing. Let's consider all the pros and cons.
What is intraday trading
Intraday (from the English "intraday") is one of the approaches to trading in the financial markets, in which open positions are not carried over to the next day. All trading is carried out only within the day
Often they say a different name - "day trading" (from the English "day trade"), literal translation "day trade". It is also worth highlighting one more concept:
Intruder is a trader who only trades within the day (day traders, day traders)
In fact, an insider is a "speculator". He is concerned about the issue of making money on any asset here and now. Such a trader does not care what will happen next with the value of the asset.
You shouldn't be afraid of the word "speculator". They are in the overwhelming majority on financial markets. And in real life, virtually all small businesses make money on speculation (arbitrage): they bought in one place cheaper, sold in another more expensive.
The main rule of intriders is not to leave positions overnight. Trading is usually conducted using leverage. Short stop losses and take profits are placed, this allows you to minimize losses, but the profit also becomes small.
Oddly enough, most traders are intraday traders, or at least they all start with intraday trading. Over time, almost all traders go to longer distances (hold positions for at least a couple of days), since this is more profitable and takes a minimum of time.
What trading instruments are chosen for intraday
Usually intraday strategies are developed for Forex trading. This is due to the fact that there are small commissions (spread) and rather high trading volatility, which is simply necessary for those who want to make money within the day.
More specifically, with instruments, the bulk of them trades on the following pairs
- EURUSD
- GPBUSD
- XAUUSD
- USDJPY
Is it worth trading intraday
Trading within the day is an activity that is far from being possible for every trader.
1 Firstly, not everyone has free time to sit at the computer, or rather at the terminal.
2 Secondly, this is a rather "stupid" exercise. No new knowledge comes. But there are many doubts and worries.
3 Third, you need strong nerves (trading psychology). After all, deals are almost always open and the balance jumps right before our eyes. Not every trader will be able to "not break" at the sight of such a picture.
As a rule, intraday earnings are small. After all, their goal is to make money on small fluctuations. In this case, you have to pay the spread, which "eats" part of the profit. Intraday traders are the main sources of income for brokers, because their earnings depend on the trading turnover of their clients.
Pros and cons of intraday trading
Arguments "FOR" playing within the day
- Sleep better due to the lack of night positions. This also means that no gaps on market openings are scary.
- Short stop losses do not allow you to "drain" the deposit much
- Good experience for future trading. After the intraday play, the specificity of the market movement is better felt.
- Trading results are immediately visible. You can make daily reports and adjust strategies
- Regardless of economic news, you can trade every day
- Satisfy your passion
Arguments "AGAINST" intraday play
- There are a lot of transactions, which means a large commission to the broker. In general, it is very beneficial for a broker to have a large number of playing traders inside.
- Takes much time
- Nervous occupation. Intradeal is really tired in a day.
- Not all days are good for intraday
- Risky occupation
Related entries:
If there is a way to make money on the stock exchange when the days on the market drag on more than usual, it is intraday. One-day trading or day-trading is overgrown with myths that it is difficult to open an entry point using this method, to plan a position. Practice shows that with the right choice of strategy and taking into account the main principles of trading, it is quite possible to achieve success. The only caveat of the Intraday: this method is not suitable for everyone.
Intraday trading
Actually, this is the answer to the question: what is intraday trading? Intraday trading is short-term, but an order of magnitude higher than scalping. Intraday trading is presented to newcomers in the form of a beautiful picture with a delicious breakfast, moving to a home office with a powerful computer, programs with a schedule, where you just need to find a profitable point. A call to a broker is money in your pocket, and then you can rest to repeat the scenario the next day.
Experienced traders who have tried intraday trading are not as optimistic. You won't be able to constantly make a profit using this method, but you can trade once or twice a week. Hence the conclusion: if your ideas about day trading are based on the understanding that for success you need to make many transactions per day and do it every day, then intraday is not suitable for you. First, you need to understand the basics of this method of trading on the exchange.
Features of intraday trading
Before starting trading, a trader needs to assess the external background. It is better to ignore the news that will come during the day, because they can rarely affect the situation, except that it is sharp and for a short period of time. To make trading decisions, you will need to track signals, an important aspect is a psychological factor: instead of emotions, arm yourself with composure, composure, and concentration.
The price movement in intraday trading is almost impossible to predict. Among the factors influencing, there may be: days of the week, macroeconomic news, speeches of politicians, active trading sessions, because the exchanges serving their companies do not work around the clock.
What else is useful to know about intraday trading?
- You need to be able to analyze charts, see price movements, i.e. you need to be an observant trader.
- Mindfulness will help to find the point of entry into the market, determination - to take profit.
- Practical experience in trading is encouraged as it provides a general understanding of the situation and nuances. For example, when it is necessary to determine: a flat or a trend is in progress.
- The value of either profit or loss depends on the ability to correctly place a "stop-order".
- On intraday, no more than 10% of the deposit amount should be allocated.
If we talk about the recommendations of professionals, then intraday trading is suitable for novice traders. In favor of intraday for them says: the ability to choose for testing a particular trading system; small amount of start-up capital; pumping practical skills of trade and development thinking trader .
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