2020 was the year of the pandemic. Amid this condition, several businesses were forced to change their working model and therefore, shifted towards the remote working environment. With the Covid-19 situation persisting in the first quarter of 2021, a number of companies continue to offer work from home flexibility. Due to this reason, individuals have been inclined towards making money through day trading on the side, while keeping their normal working hours and full-time careers intact with remote jobs. If you are a rookie to intraday trading, you might wonder which intraday trading strategies could help you gain a competitive edge as well as put you on the fast track to profitability.
Let’s first start by understanding the concept of intraday trading. Intraday trading or in other words, day trading is just a form of normal trading. However, the focus in this form of trading is on shorter time frame strategies. These strategies allow positions to be held and shut down in the same trading day session. These time frames with shorter durations of trade are made in a volatile series, in order to scalp the smaller profits that would gradually stack up.
Let us now dive straight into a few of the renowned and successful intraday trading strategies.
1. Relative Strength Index (RSI) Intraday Trading Strategy
RSI is basically the measurement of how fine the stock is accomplishing itself by associating the strength of the days up versus the days down in the trade market. It is a technical analysis in which traders will be acknowledged when the assets reach the conditions of either oversold or overbought. For traders to take a good position, it is recommended to simply wait for the RSI to reach above the index of 70 or under 30. However, RSI cannot be trusted wholly as it can often give false signals or double top or double bottom reading. Therefore, traders must authorize these movements with a getaway concept of an important trendline whenever conceivable.
2. Moving Average Convergence Divergence (MACD) Intraday Trading Strategy
MACD is most notably used by technical analysts. This strategy is most commonly used to identify the direction of the trend, its rate of change as well as its velocity. Traders with this strategy can predict when the changes in a trend are about to take place. Most occasionally it is stated to be a lagging indicator. However, it is wholly up to the trader to use this as part of his day-to-day toolset.
The next strategy is among one of the favorite strategies of cryptocurrency traders.
3. Parabolic Stop and Reverse (SAR) Intraday Trading Strategy
This popular strategy makes it easy for traders to see where to place a stop-loss order. After that, it allows traders to use the tool to set trailing stops as the price moves up in a bullish direction. Parabolic SAR is convenient to use. It also offers a very easy-to-understand visual signal system. The common practice of this strategy is to find the potential reversals as well as gauge trend strength. It is often amalgamated with other indicators, to confirm the signals beforehand taking any position size.
It is always a good practice to combine different day trading strategies if you want the desired results. The upcoming strategy, namely Bollinger Bands Intraday Trading Strategy, can also be used effectively and efficiently by being integrated with other strategies. As the strategy works on the graphical representation of bars and bands, you will get an overview of the conditions of assets that are oversold or overbought. Let’s get into the details of Bollinger Bands’ strategy.
4. Bollinger Bands Intraday Trading Strategy
This remarkable trading strategy is used to regulate the entry and exit points for a trade. The bands are used to discover the conditions of overbought or oversold. When the bands get tight, it is a signal that volatility has dropped and an explosive move is anticipated in the trade. It is considered risky to use only the bands to carry out a trade, since the focus of the indicator is only on the price and volatility. Combining with other strategies is advised.
Next up is the trading strategy that will use both fast-moving and slow-moving averages.
5. Moving Averages Intraday Trading Strategy
In this strategy, a fast-moving and a slow-moving average line are combined. They can act as a signal to take the position when the price passes through both of the moving averages. These are technical and based on mathematical formulas that are designed to form visual representations. This way, traders can conveniently analyze individual data points through a series of timestamps.
Those were some insights into major intraday trading strategies that are vital enough for you to learn, in order to become a good day trader. Use a combination of your experience and the knowledge provided to get the most out of day trading. If you are interested in learning new and effective trading strategies, become a member of Rich Picks Daily by clicking here.