7 Commonly-Used Intraday Trading Strategies For Indian Stock Market
Intraday trading occurs when you buy a stock and sell it on the same day during market hours. Traders frequently use it to profit from market movement. As a stock market trader/investor, you must have a demat account and a trading account.
Without these you cannot buy or sell stock online. The same broker can be used to create these two accounts. Before we get into the commonly used intraday trading strategies, let’s first define the Demat account vs the Trading account.
Demat Account vs Trading Account
A Demat A/Cis different from a Trading account in the sense that the former stores all your securities and shares in digital format, whereas the latter is used to place stock orders in the stock market.
Share market trading needs you to have three accounts: –
- Trading account,
- Bank account and,
- Demat account.
Your share market trading is an interplay of these three accounts. The combination of a Trading and Demat account is referred to as a 2-in-1 account. Moreover, your Trading Account connects your bank account to your Demat account, allowing you to trade in stock markets.
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Returning to intraday trading strategies, here are seven commonly used intraday trading strategies listed below.
- Breakout Strategy – This strategy relies heavily on timing. It tries to determine the points after which stock prices rise or fall. If the stock price continues to increase intraday, traders consider buying stocks; if the price decreases, traders consider selling stocks.
- Momentum Strategy – This strategy is mainly about capitalising on the current market momentum. Traders identify the right stocks to buy and sell before a significant change happens in the market trend. Any news concerning any particular stock can alter its momentum, and intraday traders analyse the news before the market opening and trade accordingly.
- Reversal Strategy – Share market trading entails some risk, but this intraday trading strategy is even riskier. Traders make counter-trend decisions based on calculations and analysis that the trend will change and will gain profits.
- Gap Strategy – Certain stocks may have no pre-market volume at times. These stocks have different values from the last day. And if the gap value is higher than the previous day, it is referred to as a gap up, whereas if it is lower, it is referred to as a gap down. Intraday traders identify these stocks and invest in them with the hope that the gap will close by the time the market closes.
- Moving Average Crossover Strategy – This is yet another strategy employed by Indian intraday traders. It entails using the moving average as an indicator point to detect changes in the trend. When a stock’s price exceeds its moving average, an uptrend occurs. When the price falls below the moving average, a downtrend occurs. Traders attempt to locate such stocks at the right time.
- Scalping Strategy -Profits are made from small price changes in this trading strategy. When dealing in commodities, intraday traders employ this strategy.
- Head and Shoulder Trading Strategy – Traders attempt to profit from the repeated emotional decisions made by other traders. The technical charts reflect the decisions made.
Intraday traders can use these strategies to make money in the share market trading. Commodity trading requires more attention as it is done via derivatives which can prove to be fatal for your financial soundness if not done carefully.
Thus, also learning concepts of leverage, margin and how they apply in practical working should go along with trading strategies. A successful commodities trading requires an eye on various aspects.