Intraday trading - Tips, strategies, and techniques

Interested in the markets but don’t want to deal with overnight risks? Learn the best tips, trading strategies, and techniques to succeed as a beginner in intraday trading.

Intraday trading, also known as day trading, can best be described as buying and selling assets within a single day. Intraday traders seek to profit from quick price fluctuations over a short time. This requires fast decision-making, technical analysis, and a reliable risk management plan to avoid significant losses.

Content

1. What is intraday trading?
2. Pros, cons, and who should consider intraday trading
3. How to do intraday trading
4. Intraday trading strategies
5. Key techniques for successful intraday trading
6. How to choose stocks for intraday trading
7. Advantages and disadvantages of intraday trading
8. Key takeaways
9. Final thoughts

What is intraday trading?

Definition of intraday trading

Intraday trading is the buying and selling of stocks, forex pairs, commodities, and other assets within a single trading day. If a trader doesn’t close their position, the broker may do it automatically at the end of the session.

How intraday trading works:

• A trader buys an asset at 10:00.
• By 14:00, the price increases, and they sell for a profit.
• If the trade is not closed manually, the broker may close it by the end of the day.

For example, if a trader buys 100 shares of XYZ stock at 50 USD/share and sells them before the market closes at 52 USD/share, they will earn a profit of 200 USD.

Equation: Selling price - buying price multiplied by the number of shares or (52 USD – 50 USD)\*100.

If the trader sells the stock when it is valued at forty-eight dollars per share, they lose 200 USD.

Key features of intraday trading

1. Leverage and margin trading: Intraday trading often involves leverage, which allows a trader to control bigger positions with less capital. For example, 1:10 leverage means a trader with 1,000 USD can control a 10,000 USD trade.
2. Immediate execution and market monitoring: Intraday trading requires constant attention since price movements may occur within minutes or even seconds.
3. Focus on short-term price movements: Intraday traders utilize technical analysis, charts, and market trends to predict price movements within a very short duration. Methods include:

• Moving averages: To identify trends.
• RSI (relative strength index): To spot overbought/oversold conditions.
• MACD (moving average convergence divergence): To confirm momentum shifts.

Benefits of intraday trading

• Potential to earn profit in a short time: Traders can earn profits within a single day and do not have to wait for long-term profits.
• Profit without overnight risk: Day traders do not take on the risks of overnight news, gaps, or economic events since they close the trade before the market closes.
• Larger margin requirements: Because intraday traders can trade with leverage, they require less capital to start trading.
• Better market knowledge: Day traders develop their skills by constantly observing price action, trends, and chart patterns.

Pros, cons, and who should consider intraday trading

Pros of intraday trading

• Potential for quick returns: If intraday traders leverage short-term price movements, earning a profit could take only hours or minutes. Unlike long-term investments, which can take months or years to see returns, profits are instant once a trade is closed. 
• Flexibility over control and trades: Day traders can monitor their trades anytime during market hours, letting them open/close whenever they want. Unlike other trades, they don’t need to worry about news, earnings reports, or data releases.
• Learning opportunity for traders: Day traders obtain valuable experience in price action and market behavior by actively trading. The quick nature of intraday trading develops discipline, decision-making skills, and risk-management strategies.
• Diversification of trading strategies: Traders can discover different intraday trading strategies, such as scalping, momentum trading, and breakout trading, to find what works best for them.

Cons of intraday trading

• High risk, especially for beginners: Market movement is rarely constant or predictable which can lead to devastating losses in a short timeframe. Leverage increases the possibilities of both profit and loss while making the situation more risky for ill-prepared traders.
• Limited time to make decisions: Intraday trading needs quick execution and constant monitoring, making it undesirable for traders who cannot dedicate time to the markets. 
• No ownership of stocks: Unlike long-term investors who own shares and can benefit from dividends, intraday traders do not hold stocks beyond the trading session. 
• Emotional strain due to volatility: Making multiple trades in a short period of time can lead to emotional decisions and trading mistakes. 

Who should consider intraday trading?

• Traders who can dedicate time to monitor the markets actively.
• Those with a strong understanding of technical analysis and risk management.
• Traders who are comfortable making quick decisions under pressure.
• Individuals with a high-risk tolerance and capital they can afford to lose.

How to do intraday trading?

Steps to start intraday trading

1. Open a reliable trading account: To initiate intraday trading, you must open a trading account. Choose a broker with low spreads and high liquidity capable of performing real-time market execution, like Exness. Look out for advanced charting, technical indicators, and risk management tools.
2. Learn margin, leverage, and square-off policies: Trading on margin means that the trader only has to pay a small amount to open a position. Leverage enables the trader to deal with a larger trade than the account's worth. Excess use of leverage may culminate in a margin call. A broker would usually square off intraday positions to mitigate the risk of overnight exposure.
3. Use technical indicators to identify trade opportunities:

• Moving averages – Identify overall trend direction.
• RSI – Detect overbought/oversold conditions.
• MACD – Confirm trend momentum.
• Bollinger Bands – Measure price volatility for potential breakouts.

1. Create a risk-managed trading strategy: Define entry and exit points based on technical signals and support/resistance levels. Set a stop loss order to limit potential losses. Keep a risk-to-reward ratio of at least 1:2 or 1:3 to ensure profitability.
2. Look for market opportunities: Stay up to date with news, overall market mood, and international developments that could impact short-term prices. Utilize Exness trading charts for real-time price action updates.

Risk management in intraday trading

Using appropriate risk management is fundamental to minimize losses and maximize profitability. Below are several key risk management techniques:

The importance of stop loss: A stop loss is an order placed to close out a position and  cap exposure. For instance, if you purchase a stock at 100 USD and place a stop loss at 98 USD, you will lose a maximum of 2 USD.

Setting realistic profit and risk goals: Define maximum risk per trade (for instance, between 1-2% of your total account balance). Choose institutional parameters that are well defined based on support/resistance levels or e reinforcement Fibonacci retracements.

Limiting the amount invested in a single trade: Traders shouldn't concentrate too much of their trading capital on a single trade. Hence, a trader with a 10,000 USD trading account should not risk more than 200 USD on a single trade, assuming the 2% rule applies.

Intraday trading strategies

Intraday traders use different strategies to capitalize on short-term price movements. The right trading strategy is dependent on market conditions, the trader’s level of experience, and the amount of risk the trader is willing to take. Let’s explore some of the most effective intraday trading strategies, followed by two popular time-based methods: the 9:20 trading strategy and the 9:30 trading strategy.

Best strategy for intraday trading

There is no single best trading strategy for intraday trading—successful traders often combine multiple approaches. The most commonly used intraday strategies include:

Scalping: Focuses on making small, quick profits throughout the day. Traders enter and exit trades within minutes, capitalizing on tiny price movements. It requires high liquidity, tight spreads, and fast execution, and works best in volatile market conditions.

Momentum trading strategy: Based on strong price movements with high volume. In momentum trading, traders look for assets experiencing rapid price changes due to news or market sentiment. It is ideal for trading breakouts and high-volatility stocks.

Breakout trading: This strategy identifies key support and resistance levels. Traders enter a trade when the price breaks through a key level, expecting continued momentum. It works best with high volume confirmation. Reversal trading: Aims to catch trend reversals by spotting overbought or oversold conditions. Traders use indicators like RSI, MACD, and Bollinger Bands to identify turning points. This trading strategy requires precise entry timing to avoid false signals.

The 9:20 intraday strategy

What is the 9:20 strategy?

The 9:20 trading strategy involves taking positions immediately after the market opens at 9:20. It is based on the initial market volatility that occurs within the first few minutes of trading.

How it works:

1. Watch the first 15-20 minutes of price movements.
2. Look for strong and sharp moves either upwards or downwards.
3. Follow the momentum and take the appropriate position.
4. To manage risks, set a stop loss below the morning low/high.

Best conditions for the 9:20 strategy:

• Works best in high-volatility markets with strong morning movements.
• It Should be used with high-volume stocks or currency pairs.

The 9:30 strategy

How the 9:30 strategy works

The 9:30 trading strategy is similar to the 9:20 trading strategy but focuses on price action within the first 30 minutes of the market opening. It uses technical indicators like RSI and Bollinger Bands to confirm entries.

Steps to apply the 9:30 strategy:

1. Analyze market behavior from 9:00-9:30.
2. Identify breakout or reversal opportunities.
3. Place trades once confirmation is received.
4. Exit trades within 30-60 minutes to avoid midday volatility.

Key takeaways of the 9:30 strategy:

• Most effective in markets with large opening volatility.
• Works well with stocks, forex, and indices.
• Combining it with risk management (stop loss and take-profit) is essential.

Key techniques for successful intraday trading

Using technical indicators

Technical indicators help traders identify trends, momentum shifts, and potential reversals. Below are some of the most widely used indicators:

Moving averages (MA) – Identifying trends: Moving averages smooth out price fluctuations to highlight trend direction. The Exponential Moving Average (EMA) is preferred for intraday trading due to its responsiveness to price changes.

Strategy:

• Buy when the shorter moving average (e.g., 9-day EMA) crosses above the longer one (e.g., 20-day EMA).
• Sell when the shorter moving average crosses below the longer one.

Bollinger Bands – Measuring volatility: The middle moving average is flanked by two outer bands. A price that contacts the lower band indicates that it is oversold (a period in which it could be used for buying). If the price reaches the upper band, it shows that it is overbought (a period in which it could be sold).

Strategy:

• Buy when the price bounces off the lower band with increasing volume.
• Sell when the price touches or exceeds the upper band.

RSI – Spotting overbought/oversold conditions: RSI is a market indicator with a range of 0 to 100 that gauges the velocity and change of price movements. The price is considered overbought when the RSI is over 70 (a likely reversal toward downsides). Furthermore, the price is oversold when the RSI is under 30 (a possible change toward upsides).

Strategy:

• Buy when the RSI moves above 30 after being in oversold territory.
• Sell when the RSI moves below 70 after being in overbought territory.

MACD – Momentum indicator: A MACD indicator consists of a MACD line, a Signal line, and a Histogram. A bullish signal occurs after the MACD line moves above the Signal line. Bearish momentum is shown when the MACD line shifts below the Signal line.

Strategy:

• Buy when the MACD line crosses above the Signal line in a strong uptrend.
• Sell when the MACD line crosses below the Signal line in a downtrend.

Intraday trading charts and timeframes

Intraday traders must select the right timeframe to analyze market trends and execute trades efficiently.

Best timeframes for intraday traders:

• 1-Minute Chart (1M): Ideal for scalpers who make multiple trades within minutes.
• 5-Minute Chart (5M): Commonly used for short-term trend analysis and quick trades.
• 15-Minute Chart (15M): Helps traders spot entry and exit points based on early market movements.
• 30-Minute Chart (30M): Provides a broader view of trends while still keeping trades short-term.
• 1-Hour Chart (1H): Useful for confirming trends before making intraday entries.

How to use daily and hourly charts for decision-making:

• Daily charts provide an overview of market trends, helping traders identify support and resistance levels.
• Hourly charts refine entries by showing recent price behavior and trend strength.
• Using two or more timeframes helps traders achieve high-level precision when executing trades.

How to choose stocks and other assets for intraday trading

Criteria for selecting stocks and other assets

To maximize intraday trading opportunities, traders should focus on assets that meet the following criteria:

1. Liquidity and trading volume: High liquidity means an asset can be bought and sold with minimal slippage, while high daily trading volume on a stock guarantees price action and execution. Large-cap stocks, blue chip stocks, and some highly traded forex pairs are ideal. 

2. Volatility – Price movements within a day: Assets with a higher Average True Range (ATR) are preferred, as they offer more opportunities to capitalize on price swings. Look for assets with at least 1-2% daily price movement.

3. Correlation with major market indices: Stocks that follow major indices like the S&P 500, Nasdaq, or Dow Jones tend to mirror market trends, making them easier to predict. If the index is rising, focus on bullish stocks. If the index is falling, look for shorting opportunities.

4. Trade Volume Index (TVI) – Analyzing momentum: TVI helps traders identify whether buying or selling pressure is dominant in a stock. A rising TVI suggests buyers are in control, indicating a possible bullish trend.

Stock categories ideal for intraday

Certain types of stocks are better suited for intraday trading due to their price action, liquidity, and volatility.

1. Highly liquid stocks

Stocks with millions of shares traded daily, such as Apple (AAPL), Tesla (TSLA), Microsoft (MSFT), and Amazon (AMZN).

2. Stocks with significant daily price movements

• Stocks that frequently experience large intraday price swings offer higher profit potential.
• Look for stocks reacting to earnings reports, economic news, or industry trends.

3. Sector and industry analysis for better stock selection

• Focus on strong-performing sectors in the current market cycle.
• If technology stocks are rising, look for trades in tech giants like Google and Meta.
• If energy prices are surging, energy stocks like ExxonMobil might present good opportunities.

Advantages and disadvantages of intraday trading

Advantages of intraday trading

Short-term profit potential: Unlike long-term investing, intraday traders capitalize on price movements within a day. If the right trading strategy is applied, it is possible to repeatedly enter and exit positions during a single day.

No overnight exposure to market risks: Since all positions are closed before the market closes, traders avoid overnight risks like earnings reports, geopolitical events, or economic news that can lead to unexpected price gaps.

Ability to leverage small capital for larger trades: Leverage allows traders to take positions larger than their ordinary capital would allow. For example, if the trader has 1,000 USD in capital, they can use 10:1 leverage to control a 10,000 USD position. Leverage increases both potential profits and risks.

High liquidity and quick order execution: Intraday trading typically involves highly liquid assets, allowing traders to enter and exit positions without significant price impact. Advanced trading platforms like Exness offer fast execution speeds, reducing slippage.

Disadvantages of intraday trading

High risk of losses due to short-term volatility: Prices fluctuate rapidly, making it easy to misjudge entry and exit points. Without proper risk management, traders can lose significant amounts in a single session.

Emotional strain and decision-making pressure: Constant market monitoring can be mentally exhausting. Traders must control fear and greed, as impulsive decisions often lead to unnecessary losses.

Brokerage fees for high-frequency trades: Frequent trading incurs transaction costs (spreads, commissions, and fees). These costs add up, reducing overall profitability, especially for scalpers who place multiple trades per day.

Requires deep market knowledge: Intraday trading demands a strong grasp of technical analysis, price action, and market trends. Beginners often struggle due to the steep learning curve.

Key takeaways

1. Intraday trading relies on quick decision-making within the same trading day:  Intraday trading involves buying and selling assets within the same trading day to avoid overnight risk. Traders often capitalize on early trading hours and make numerous trades as they react to short-term price movements.
2. Success in intraday trading depends heavily on using the right intraday trading indicators: Tools like Moving Averages, RSI, MACD, and Bollinger Bands are critical intraday trading indicators that help traders identify trends, reversals, and entry/exit points.
3. Crafting a personalized intraday trading strategy is crucial for long-term success: Traders should develop an intraday trading strategy that suits their risk profile and trading style (scalping, breakout, momentum, or reversal trading
4. Proper risk management is the backbone of sustainable day trading: Setting stop-losses, calculating position sizes, and maintaining a healthy risk-to-reward ratio are essential to protect against market risk and ensure trading longevity.
5. Top stocks for intraday trading have high liquidity and volatility: Traders should focus on high-volume, high-volatility assets. Selecting the right stocks for intraday trading boosts the chance of capturing profitable price movements.
6. Mastering intraday trading requires sharp trading skills and emotional discipline:  Successful intraday trading demands strong trading skills, fast decision-making, and control over emotions to avoid impulsive, loss-inducing actions.
7. The CFD strategy intraday trading approach offers flexibility but involves higher risk: Trading CFDs in an intraday trading context allows leverage and short-selling. However, a solid CFD strategy intraday trading plan is essential to manage the added risk.
8. The 9:20 and 9:30 strategies capitalize on early volatility: These time-based strategies take advantage of sharp price movements shortly after the markets open, a prime time for active traders during early trading hours.
9. Intraday trading tips emphasize preparation, planning, and staying informed: Top intraday trading tips include using stop losses, tracking news, avoiding overtrading, and maintaining a disciplined routine to improve performance.
10. Intraday trading is not for everyone—it’s ideal for the focused intraday trader: A successful intraday trader must be mentally prepared, adaptable, and well-practiced. Day trading suits those who thrive on active market engagement and can handle stress well.

Final thoughts

Intraday trading offers profit potential but comes with risks. Success requires discipline, proper risk management, and continuous learning. Traders should set stop loss orders, ensure they trade highly liquid instruments, study previous trades, and closely observe current market trends. Taking baby steps by opening a demo account and avoiding reckless decisions can go a long way toward building consistency and profitability.