What is The Best Day Trade Strategy – Complete Guide 2020?
An intraday trade is the buying and selling of assets, but only in one day. Trading during this day can occur in any market, but most often in the currency-paired currency market or the index-linked stock market.
Trader lntraday knows how to take advantage of the small price movements of the day, speculates during the session, but closes its operations before the end of the day, without delaying any position the next day.
The strategy, used by Forex traders of the day, is to leverage the up and down movements and generate profits during the session. In intraday speculation, a stock, a stock index, or a very liquid currency is usually sought.
All about intraday Forex day trading
There is no formula for success as a Forex trader. Good training is essential, but neither does it guarantee success. The risk increases when prices fluctuate sharply during the day.
Trade intraday eliminates commission charges to keep positions open overnight. In trade, these commissions are called swap. In some cases, when you trade contrary to the market, this swap may be positive. That is, an income instead of a commission.
A strategy based on acquiring positively swapped assets is called Carry Trade, but this strategy is beyond the scope of this article.
Day trading is also used to avoid exposure to the risk of large price movements at night while we cannot monitor the market or it is closed. Day day trading eliminates the risk of a stock market gap.
Intraday traders are very important to markets as they provide liquidity to the market.
The best currency pairs operate intraday
Leading pairs are often considered the best option because they have the largest volume of transactions in the Forex market. With regard to daily Forex trading, especially for forex traders, it is advisable to focus on the EUR / USD currency pair, as this pair generally has the most favorable market conditions and its price varies widely.
Requirements for intraday trade.
Most important for any style of trade, intraday and the trader must also execute a trade plan that includes detailed risk management. That is, adequate and controlled risk / reward ratio.
Dominate the stock markets
A thorough understanding of the functioning of the market and the key factors determining market movements is essential. A day trader should control the technical and fundamental indicators. One of the methods for understanding how markets work is to study a plethora of fundamental strategies that have always existed in markets.
This will complement your market insight and enable you to identify the opportunities that different types of traders are looking for, as well as complement their opinion of an investment opportunity.
The Intraday day trading discipline
Discipline is important in all aspects of life, but neglecting this discipline in intraday transactions can result in huge losses. The success of the stock market without discipline is virtually impossible.
You should be able to control prices during certain periods without making imprudent decisions. This is difficult and requires a lot of discipline.
Sometimes the market follows the moves you anticipated, but just because you could anticipate that doesn’t mean you should execute the order.
The intraday day trading risks
The shorter the period in which it operates, the greater the risk. This is why intraday Forex day trade and Scalping are known as higher risk trading styles.
Because markets can only move a certain amount of points in a trading session, intraday traders use high-risk trading techniques to increase profit volume.
These techniques are:
High levels of leverage to try to take advantage of price movements
Increased number of operations with the same objective.
Intraday for Beginners
The first step in becoming a lucrative Forex trader is simple and not unlike other trading strategies. As a beginner, it is advisable to trade intraday with virtual money in a demo account to learn how the forex market works. It may seem too simple, but it is vital.
Another important point for intraday day trading strategies is choosing a good Forex broker (this point will be discussed in more depth later).
As we said, intraday traders perform a large number of daily trades, so spread and commissions are important.
The possibility of losing the investment is high, so it is advisable to invest only money that “you can lose” during your intraday trade session.
Since August 2018, ESMA has been regulating leverage levels and marking differences between professional traders and retailers. This regulation prevented inexperienced traders from losing large amounts of money, as leverage is a high-risk trading tool with which even professional traders can lose large amounts of money.
Another important issue in becoming a profitable trader is knowing how to read the charts. This for trade intraday is essential because, unlike long-term trade, they cannot be based on fundamentals.
Intraday Techniques and Strategies
There are different techniques for operating intraday. Some are based on economic news publications, while others are based on the opening of the stock market.
Essential Trader intraday
- The first thing a novice intraday trader should detect is their investor profile, ie their aversion or risk appetite.
- Regardless of the intraday trader’s risk profile, you should test your strategy in a risk-free environment, such as a demo account, trade simulator, or backtesting.
- The fundamental tool of the intraday trader is the technical analysis
- Factors to master and not to miss in intraday strategy are volatility and liquidity
- Volatility is the magnitude of market movements. In short-term trading, strong volatility is required. This essentially reduces the instrument selection for the major currency pairs and some cross pairs, depending on the trading sessions.
- Liquidity is also important. A long term trader can afford to give up 10 pips, but a short term trader can’t, because those 10 pips can be the full benefit. Obviously, this accuracy comes from the trader’s ability to trade in the short term, but also from market liquidity.
- If there is little liquidity in the market, orders are not always executed at the desired price. This again encourages intraday traders to trade certain instruments and only for specific periods.
One or more strategies must be adopted to minimize losses and maximize profits. Because market conditions vary from day to day, you should be able to follow them.
A profitable trader must be able to vary or adjust his strategies daily and according to market conditions. For this, in addition to much experience, a creative mind is required.
Intraday Strategy Countertrend
Trade against trend is probably one of the worst strategies to adopt if you are an inexperienced trader.
This technique is also known as withdrawal trade. A trader of contrary trends should not only be able to identify temporary changes in the direction of travel with high accuracy, but also predict their strength. While not impossible, it requires a lot of experience and mastery of price action trading.
If you want to try this strategy, do it on a demo account, the pivot point indicator can help you identify tipping points.