Popular Intra-Day Trading Techniques
There are many strategies that can be learned by day traders. Some of the more popular techniques used by day traders are:
This strategy assumes that the stock being traded will continue its current direction, either moving up or falling down. The idea is to buy a security that has been moving and follow the momentum of the trade.
This strategy assumes the stock can no longer continue trading in its current trend and is due for a reversal. The contrarian trader buys stocks that have been falling or shorts one that has been rising because they expect the trend will change. They usually use technical tools which indicate Overbought and Oversold prices.
The buyer looks for stocks that have been trading in a range and are either rising off a support level or falling from a resistance level. The idea is to buy the stock at a low price in the range and sell it when it gets higher in the range, or short the stock at the high portion and buy it back when it drops.
This technique exploits the small gaps in the bid-ask spread. These trades usually require quick movement that permits the day trader to capture profits quickly. These trades sometimes last less than a minute, as the trader takes advantage of the market’s volatility.
There are many other strategies and techniques that can be used when day trading. Because of the volatility and risk involved with day trading, all strategies should be practiced until proficient by using paper trades. A good stock market education should be the basis of any day trading career, as it will provide the foundation fundamentals that can help build for success.
Whatever type of trading you do, Your trading should be scalable.
Scalability in Trading
Vada Pav stalls do good business every day and one joint near to my residence sells 1000+ vada pavs every day. The person who runs this business has a staff of 25 people and over the years this joint has become very famous because people just love the tasty hot and spicy stuff they make. Now if I go and tell this guy that I need 10,000 vada pavs then he may not be able to do it because making such a huge quantity needs more manpower and a bigger space. So we can say that this business is not scalable. So find out first whether Day Trading is Suitable for you or not.
Now think about your trading business. Normally you trade 100 shares. You want to trade 1000 shares. Assuming that you have the capital then all it takes to trade 1000 shares is to add one zero in your order screen! Everything else remains the same! So we can say that the trading business is scalable. Read more on scalability.