How To Make Money In Intraday Trading?

Making money in Intraday trading isn’t as easy as it seems on TV ads or any brokerage firm’s social networking pages. But we can’t deny the fact that it is the most recommended and frequently used trading strategy. In simple terms, it is as rewarding as challenging to apply.

While most new traders are stuck on a common question – “How To Make Money In Intraday Trading?” they first need to understand the fundamentals & gain the trading experience it takes to become a profitable day trader. Remember, it’s not a get-rich-quick scheme.

As an experience day trader, I always strive to help traders, especially beginners. Through this write-up, I will share a few of my tips, tricks & experiences on How To Make Money In Intraday Trading? Let’s first understand what day trading exactly is & how it works.

What Exactly Is Intraday Trading?

Intraday trading, popular as Day trading, means to buy a financial instrument when it’s low and selling it when it goes up within the same trading day. This trading strategy aims to make quick profits from small price fluctuations.

The strategy is highly useful in various markets, including the stock, currency, and commodity markets. But how does this strategy actually work? Here’s a simple answer. Imagine you’re a trader who wants good returns in a short time. In this case, day trading suits you the best.

The success of this strategy greatly depends on your entry & exit. When you master it, you can call yourself a successful day trader. You can use technical analysis tools & real-time data to get help in making quick and informed decisions about when to buy and sell.

How Can You Make Money In Intraday Trading?

As said earlier, it’s not a get-rich-quick scheme, but if you think so, you may be getting it wrong. Like any other trading strategy, Day trading takes a reasonable market understanding, practice and experience to yield positive returns.

Based on my experiences and market expertise, I have compiled a list of some best ways to make money in intraday trading. Let’s take a look at them.

Make A Trading Rule Book & Adhere to It

Success in any field can be achieved if you adhere to your pre-determined plans & rules. It’s no different in day trading. So, before you start to day trade, it’s essential to have a trading rule book handy and write your goals, plans & rules in it.

For instance, you can pre-decide some key aspects, like how much you can afford to lose and what should be your risk-reward ratio. And most importantly, success won’t come only by writing but by strictly following them.

Identify Market Trends

Before directly starting to trade, it is crucial to understand the direction in which the market is moving and make trades based on that information. You can identify market trends using technical indicators, which primarily include

Moving Averages: It helps identify the overall direction of a market trend. By plotting the average price over a certain period of time, it can help you identify whether the market is trending up, down, or sideways.
Relative Strength Index (RSI): This momentum indicator gives insights into the overbought and oversold conditions. A high RSI reading may indicate that the market is overbought, while a low reading may indicate that it is oversold.
Bollinger Bands: This volatility indicator help identify potential price breakouts. If the price breaks through the upper band, it may indicate an uptrend, while a break through the lower band may indicate a downtrend.
Volume Indicator: A high volume during an uptrend indicates intense buying pressure, while a high volume during a downtrend indicates strong selling pressure.
Breaking News and Economic events: Keep an eye on the latest news and economic events, as they can significantly impact market trends.

Use Technical Analysis

Using technical analysis is as important as identifying trends in Intraday trading. In addition, it helps traders discover potential buying and selling opportunities.

Here are some ways to use technical analysis for day trading:

Chart Patterns: Look for common chart patterns, such as head and shoulders, triangles, and flags, which can indicate a potential reversal or continuation of a trend.
Identify Support and Resistance Levels: Identifying key levels where the price has historically found support or resistance is vital to identify entry & exit in Intraday trading. If the price breaks through a critical resistance level, it may indicate an uptrend, while a breakthrough at a key support level may indicate a downtrend.
Candlestick Analysis: Study the formation of candle stick patterns, such as the Hammer, Doji, and Shooting Star, which can indicate potential buying or selling opportunities.

Pick An Appropriate Leverage Ratio

Leverage allows traders to trade with more capital than they have in their trading accounts. While it seems as the best tool to make money in Intraday trading, it often comes with a higher risk of losing more than what you have traded.

Here’s how you should use leverage in Intraday trading:

Understand the Risks: Leverage can magnify potential gains but also increase potential losses. Make sure you understand the risks and are comfortable with them before using leverage.
Use it In an Appropriate Ratio: Different market instruments have different levels of volatility, so it’s important to use appropriate leverage for the level of risk you are comfortable with.
Use Stop-Loss: Have a plan in place to manage and minimize risk, such as using stop-loss orders to protect your position.
Be disciplined: Stick to your plan and don’t let emotions get in the way of making sound trading decisions.

Have a Risk Management Plan In Place:

Having a risk management plan in place is essential for making money in intraday trading. Here are some ways to create a risk management plan:

Set a stop-loss: The feature comes as a basic plan with any trading platform. It automatically exits a trade when a specific price is reached. This helps to protect your position from significant losses.
Use Position Sizing: It is a process of determining how many shares or contracts to trade based on the size of the account and the level of risk you are comfortable with.
Have a Plan for Entry and Exit: Have a plan for both entry and exit of the trade, and stick to it. This helps to avoid impulsive decisions based on emotions.
Diversification: Diversifying your portfolio by trading different instruments and markets can help to reduce overall risk.
Monitor your Trades: Keep a close eye on your trades and be prepared to exit quickly if the market moves against you.
Have a Risk-reward Ratio: Have a clear understanding of each trade’s potential risk and reward and ensure the risk is worth taking for the potential reward.

Choosing The Reliable Broker

The profitability of your trades dramatically depends on the reliability of your chosen brokerage firm. Unfortunately, in many cases, we have seen many brokers duping their clients’ money either by trading against them or levying higher fees.

So, it is important to consider several factors, including the broker’s fees, trading platform, and regulatory oversight. Alternatively, you can choose the day trader’s best choice – AvaTrade.

Setting A Fixed Profit Target

It’s essential to be clear on some basic aspects, especially on how much profit you’re willing to make. So, before placing your first trade, set up a fixed & clear profit target and make sure to exit the trade when it is achieved.

Don’t let your emotions and greed impact your trades; If you keep changing your profit targets, there are higher possibilities that you may end up in a loss instead of being profitable in Intraday trading.

Don’t Rely On Tips & Advices

This is the most useful advice anyone will ever give to you. While trading in the financial markets, you may come across many platforms & people giving tips & promises guaranteed profits. Try to avoid them and follow your trading plans strictly.

Avoid Opening Too Many Positions At A Time

While some traders think opening too many positions will help them make good profits in Intraday trading, it is nothing more than a misconception.

However, opening more than 4-5 at any point in time is worthless as you may find it difficult to overlook some of the positions. Therefore, you may end up losing in those opened positions.

Conclusion

The write-up “How To Make Money In Intraday Trading?” outlined all the best tips & ways a trader should be familiar with. However, it’s important to remember that intraday trading can be hazardous and you should invest what you can afford to lose.

It is always a good idea to understand its basics and practice is what makes it even more profitable. Therefore, it is highly advisable to use a free demo account to testify this strategy before applying it in real trades. The perfect way to do this is to open a free demo account with AvaTrade. The platform offers day trading on 1000+ underlying assets for free through its demo account.