Intraday trading refers to the purchase and selling of stocks the same day. This can be risky business, however the higher the risk the better the rewards. Intraday trading tips are the best friend of the momentum trader but there are a few simple things to keep in mind when participating in day trading in general.
Day Trading Basics
As a rule when day trading you want to consider volatility which will lead to better profits and more losses. Liquidity is also important as it will allow you to enter at reasonably low prices and end the day with a higher price. This can be one of the most stressful ways to deal on the stock market, but it is also the most invigorating. You can use a simple approach in which you sell as soon as you see a profit or hold as long as you can in the hopes of improving your earnings.
Patterns
There are three patterns you can watch to help you decide which stocks will work well for day trading. This is a basic of intraday trading tips you can use each day. You want to look for a spike in volume to see if people find the current price reasonable. You then want to compare the prior highs and lows for previous days. Finally, follow the Level II quotes which will show information tracked as it happens. This will show the open orders and sizes.
Strategies
There are many strategies that can be used for intraday trading. As mentioned above you can watch for the first signs of price hikes and sell immediately. This is known as scalping. This is the safest way to go and you can be happy at the end of the day knowing you made a profit. However, this can also prove frustrating if the stock ends the day at far higher earnings. A riskier approach is to watch for a stock that begins to drop in price and buy in the hopes it will regain momentum later in the day. This is known as fading and is only recommended if you can handle loss as it is far riskier than scalping. You can hold out longer once you see a stock begin to rise and hold out until you lose your nerve. This is watching the daily pivots and trusting your gut to tell you when to sell to make the most at the end of the day.
