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You must have heard from many people that Intraday trading money is only meant to lose money. But let me tell you that it is not the case when you trade by doing appropriate research, using appropriate tools and strategies. I assure you that you will this article to be very useful if you want to learn some intraday trading techniques. This article is about some beautiful and easy intraday trading techniques and best day trading strategies.
Before explaining any trading strategy, some brief is given about the indicator or any other tool that would be used in that strategy so that if you are unfamiliar with any term , you need not to go anywhere else. Everything required to understand the strategy written is present on this webpage.
After you study any technique, you must read the tips written at the end of this page to make your trading strategy succesfull ,otherwise you would be more likely to face the losses.
Along with the candlestick charts, we will be using Volume Weighted Average Price indicator abbreviated as VWAP and MACD(Moving Average Convergence/Divergence).
VWAP : This technical indicator is specifically meant for intraday trading even it cannot be plotted on the graph having time-frame more than one day. It gives the average price a security has traded at throughout the day, based on the volume traded at every price . This indicator can be used to determine the intraday trend.
This indicator consists of two fluctuating lines i.e. MACD line and signal line. Generally, signal line is red in color while MACD line is black but you can choose these colors at the time of plotting them to identify them. MACD is a trend following momentum indicator that show’s relation between two moving averages. We are not required to go much deeper into it’s study for this intraday trading strategy. We only need to know that when the MACD line comes above of signal line, then it is more likely condition to buy the stock.
The first thing you need to do is to open the candlestick chart of the stock that you want to analyse in your trading software. In this intraday trading strategy , you are advised to set the time-frame of candlestick chart at the scale of 15 minutes
to get make the trading more beneficial.
After opening the candlestick chart, now put the VWAP indicator
and MACD indicator
on study. This strategy can help us to decide whether we should trade by making long position
(when you buy the stock at first and then try to sell it at higher price) or short selling(short sell is a trade when selling action is taken prior to buying. We first sell the stock and then try to buy it at lower price later) also.
What you have to observe in the graph is the position of candles with respect to VWAP line. You have to find the situation, when the Bullish candlestick closes above the VWAP line
. When it does so, it is more likely that price of that particular stock will rise now and thus you should buy the shares of that stock. But before you buy the stocks, don’t forget to cross-check it by taking the help of MACD indicator. When the MACD line comes above the signal line it is considered to be a buying signal
and the same you have to check in this intraday trading strategy to cross-check your buying decision. When you get the confirmation, you can make the trade.
According to the very famous book “The intelligent Investor”, if you don’t dare to take the risk, then stock market is not your field and you should probably find some other field for generating money. But then also, if you want some more confirmation, then you can check for the next candle to it, if the next candle crosses the high of current candlestick or it opens gapped-up, you can enter the trade now. In this case, your entry point would be somewhat higher and thus your profit generated by this intraday strategy would also be low.
Intraday trading strategy 2:
support & resistance :
support and resistance levels are certain barrier levels that stock price hesitates to cross. We draw straight lines in our trading software to draw and mark support-resistance levels. These levels are drawn by observing the previous trends of market and identifying the levels where price movement had turned back recently. It is somewhat bigger topic and a great strategy in itself. To learn about it as whole, go to the Support and resistance
This day trading strategy is based on the concept of "Supertrend".Though ,the supertrend is an indicator provided in the trading software but we will not be using it here, although you can use it to cross verify your decision made to trade . There is a very old saying in the world of stock market,"The Trend is your best Friend" and this strategy I am going to share with you is based on the same principal. You must be knowing that anything can happen to the price of any stock in a day, it may fell , rise or even consolidate for the whole day.
What we have to do is to find out the trend that market is following and possibly going to follow the same for the following day. We have to trade according to the trend i.e. if it is an upward trend ,than we should look for buying opportunities and if follows the downward trend then try to find out for selling signals.
Before diving into the strategy or trick, first of all set the time-frame of the candlestick chart to one month i.e. each candle would be representing the price action of one month.You have to check the last candlestick of the chart, whether it is opening above the support level, whether it is bullish, bearish etc.
Similarly, repeat the process and set the time-frame of chart to one week and then to one day and observe the same things in the last candles of these charts also. If these observed candles are all bullish and have their opening point above of support level , then the overall trend on larger term is Bullish and if all these candles are bearish and have their opening point lower, then the overall trend is Bearish. Makesure that all these three candless show same behaviour to make this strategy a succesfil intraday trading strategy.Now when you have found the general trend , you need to confirm the trend for current day and for this you need to set the chart at the scale of 15 minutes.
Let the first two candlestick
of 15 minutes to be formed and if these two candles are similar to those 3 candles of other charts, then the supertrend is confirmed. If all the candles are bullish then it is a great buying opportunity for you and you should enter the the market now .Similarly, you have to sell if a clear bearish trend emerge, it means that buy when the all candle are bearish and supporting the Bears. This is very powerful strategy if followed properly.
You can set the stop-loss
at the low or high point of the last candlestick.
Intraday trading strategy 3:BAR Trading strategy
Before moving to the trading process , we need to understand about what are "Inside Bars". An "Inside Bar" is a two candlestick pattern in which the second candle is completely formed within the boundaries set by the high and low of the first candlestick. In this candlestick pattern , second candlestick is referred as an inside bar while the first candle is named as the Mother candlestick. If you have studied candlestick patterns , than you may have got that it is almost similar to a Harami candlestick pattern.
As you must have understood by now about what is an inside pattern.Now, open the candlestick chart with the time scale of 15 minutes in your trading software. First of all try to find out any inside bar pattern and when you find the one , you have got two barrier levels i.e. the high and low of the mother candlestick. What you have to do now is wait for the breakthrough of these price barriers, and when any candle does so, you have to enter the market. When the candle crosses the higher level , you have to perform a buying trade while if it breakthrough the lower price level, enter the market to short-sell. The colour of the inside candle does not have much impact but being on safer side, I suggest you to look down at the colour of candle that crosses the line of control i.e. high or low mark of the mother candlestick. When you get the buying signal, I suggest you to makesure that the crossing candle is Bullish and if you get the signal of selling, Bearish candle is preferable to cross the low of the mother candlestick. It would be even more preferable condition if the candlestick is a Marubozu (a candlestick having no upper and lower shadows) or it opens gapped up or down.
You may set the stop-loss at the bottom or high of the candlestick that crosses the threshold of the price levels of mother candlestick with little bit deviation.If the candlestick is very much small , than you can consider the high's and low's previous candle for the placing stop-loss.
Target price :
In this Intraday trading strategy, you can consider the target at a distance equal to the length of the candlestick crossing the price levels. Though you are not adviced to set the target price, it was told you to get the idea for exiting the trade.For exiting the trade or any target price, consider the tip number 3 written below in the article.
Intraday trading strategy 4:
This Intraday Trading Strategy which I am gong to tell you is considered to be simple and easy to follow but you will require some practice to get familiar with it.You have to set the candlestick chart at the scale of 30 minutes. Now you have to do nothing till the first 3 candlesticks of 30 minute each get formed i.e. do nothing till 10:45 AM. When the three candles form, mark it's high and low. I repeat, high and low, don't get confused with the opening and closing prices.
Now wait till the market cross any of these two marked levels. If market crosses the high point of third candle, you should buy the stock as it is more likely to follow the bullish trend now. Mark the stop-loss at the low of third candle or somewhat lower than that.
If market breaks the low barrier , than you have to enter the short trade and sell the stock as the chances of further decline in the price level is expected.
Remember:The marks of high and low barriers can be crossedby 4th candle or the later ones also, there is no such criteria about it.Enter the trade only when it crosses that level.
But you may find difficulty to exit the trade as there is no specific rule to for target levels.So, if you trade with this Intraday trading strategy, you can use the SUPPORT and RESISTANCE levels
But yes, tip no. 2
provided in the later section on this page will help you a lot in this strategy, not only in this , but in every strategy.To get the more returns, you are adviced not to follow any intraday trading strategy before reading the full article to make them successful day trading strategies.
One more thing, you can use this trick more than once on the same company on the same day and this is what which can generate more money for you.
Tips to turn your strategy into more succesful intraday trading strategy:
- It is very necessary to place the stop-loss while trading. As the profit margin during intraday trading is not much and if the prices starts showing opposite trends on what you had expected, then it can lead you to a big loss. When people don't place stop-loss and the prices of stocks start moving in the opposite direction, the trader in loss start assuming that the prices will reverse their trend soon and will get them out of this loss but this does not happen in most of the cases and soon this small loss turns into a bigger loss.
- If your Intraday trading works succesfully and the prices move in the direction of your expectation, you should now focus on shifting on the stop-loss some points higher if you are engaged in the buying trade adnd if you are a short seller, shift the stop-loss some points lower.You should carefully shift it as much you can because when the stock starts reversing due to any reason say, by hitting any support or resistance level than you would exit the trade with maximum profits.
One solution to this is to put Trailing stop-loss which may help you to secure your profits earned.
- As these strategies are not acclaimed to be 100% correct everytime, you should first practice them on the previous graphs. You can also practice them during live market on the free stock trading game by moneycontrol where you get 1 crore virtual cash to trade in the live market and if you are a real beginner ,you should start with a small amount first. By this way, you would earn some experience and also , you will get to know which intraday trading strategy works the best.
- To become an expert in the field of trading, you can not rely on merely 2 or three strategies,you should learn more about technical analysis tools like all of candlestick patterns, support or resistance levels and other technical indicators. If you have knowledge about them , you can really improvise these stratregies into a better version according to you.You will really become able to determine your entry and exit points in a better way and this will ultimately lead you to more profits in the stock-market.
- I want to suggest you to get through one intraday trading strategy at a time and then practice it properly, using it according to you in different ways to gain expertise in it. If you try to experiment all tricks same day , it is more likely thet you would mess everything and would not be able to the power of these strategies.
- Last but not least, avoid margin trading as a beginner because it may loss you more money than you can expect. Margin trading is only meant for the experienced players having good command over intraday trading.