Intraday Trading [Guide 2021]
Published: 4 January 2021 by Andrew
This guide aims to explain, in detail, what intraday trading means and what risks and advantages it entails. Trading online, that is, taking advantage of price fluctuations on listed goods on the market, is an activity that arouses more and more interest.
Thanks to greater accessibility to the markets, and to the information related to them, the number of investors is constantly growing. There are different approaches to trading that allow you to take advantage of the best stocks based on the methodology that suits you best.
In addition, the best solutions are proposed to obtain concrete benefits from short and / or long positions: CFD trading platforms.
Which is the best and most recommended? Surely ForexTB for beginners is excellent (zero cost and free trading course).
While for those who want to try legal and really working automatic trading, in the course of the guide we will talk about eToro, the broker that created Social Trading.
Intraday Trading meaning
Intraday trading concerns the purchase and sale of assets during a single day.
Of course, these short positions can be opened and closed on any market.
Usually, Forex, that is, the most liquid currency market with the largest trading volumes in the world, is the most suitable for this investment strategy. Indeed, many beginners just start investing in forex and only then move on to other markets.
Through intraday trading, investors take advantage of daily price movements by closing their position before the markets close.
By opting for highly liquid stocks, such as currency pairs or stock market indices, you can make profits from intraday sessions.
As you can well understand, approaching the market with very short-term objectives is an operation suitable for dynamic traders, as it is not without difficulties!
Intraday Trading: where to start
As with any style of trading, even for the intraday one it is advisable to start by selecting the reference market on which to operate.
In this case, it would be more appropriate to opt for liquid and volatile markets, ie those that during the day have various changes in value and are equally traded.
It is necessary to know the price dynamics and any factors that could affect the price of the goods.
For this reason, it may be important for the less experienced to operate on a single market, as it would be too complicated to study the reactions of each one.
In fact, when operating on assets listed on the main stock exchanges, it is very important to take into account macro and microeconomic factors: they have strong repercussions on currencies, indices and listed goods in general.
All of this means that you need to fix a potential risk that you are willing to take.
We know that no investment is 100% safe, but it is possible to limit the risk with certain strategies! In practice, it is important to define a trading system with some simple elements.
For example, you can use the stop loss: a tool aimed at safeguarding one’s capital, in the event that the market rowed in the opposite direction to the stock market forecasts!
Therefore, although the intraday trading technique requires commitment and attention, with the right tools it is possible to be able to extricate yourself well among the insidious market changes.
Day Trading with leverage
Another tool that you can use during the short positions they deal with during the day is leverage. It is a strategy that allows you to increase your exposure on a market when you invest a small amount.
Using a CFD trading platform, the broker will pay a portion of the capital to be moved for this operation.
It should be clarified that any losses or profits are based on the entire amount, therefore, the sum may appear much higher than the money actually invested.
Although it is a tool to use with the right experience, it is useful for maintaining greater liquidity, since only a small part of the money you have is used.
Simply put, leverage amplifies both profits and losses, but in the trading world, the greater the risk, the greater the returns!
With a mix of strategies, that is by applying leverage with consequent stop loss, even novice traders will be able to benefit from market trends in just one day!
Intraday Trading: which platform to choose?
Winning trading involves choosing a good trading platform. It is not uncommon to hear about scams, so it is important to verify that the broker operates legally!
It is necessary to check that it is equipped with the necessary certifications from special bodies of international caliber, whose main purpose is to protect traders.
Through free, commission-free and easy-to-use platforms, you have the opportunity to optimize your daily investments and derive the desired returns.
We offer three of the best brokers currently available: eToro, ForexTB and Trade.com, so you can find out which one is right for you!
eToro: social trading
Broker of international caliber, it offers a multi-asset platform that is adaptable to any type of investor.
eToro owes its success to the introduction of two important functions, both practical and efficient: Social Trading and Copy Trading.
In simple terms, it has established itself as the first online trading network, through which users can interact with each other.
In addition, you have the possibility to copy the moves made by other traders, personally selected based on the returns obtained!
Each user can select the investors best suited to their objectives and can apply the portfolio diversification strategy.
Therefore, Copy Trading has two advantages: you can earn immediately and learn by observing the best at work!
Open a free account with eToro and take advantage of intraday trading!
ForexTB: a support for the investments!
Platform appreciated for its extreme ease of use, it is chosen by both experienced traders and less connoisseurs of the sector.
The broker provides various tools to its users, but is especially appreciated for the important educational material it offers for free.
It is an e-book containing the main information on online trading, so as to train investors capable of operating with awareness.
To put the acquired theory into practice, you can decide to start with a demo account. A perfect trading simulation to test the effectiveness of the strategies developed without exposing yourself to risks!
Free trading signals are an additional support for making the right market decision. These are advices and forecasts developed by a team of experts considered more than valid for the formulation of a correct technical analysis.
Start investing yourself with ForexTB (open a free account here) to start making real profits from intraday trading!
Trade.com: online broker top player
Another internationally successful broker is Trade.com. Always attentive to news, he has enhanced his website and made it even more friendly! In addition, it offers a multi-asset and totally free platform.
Trade.com values the training of its users, so it offers video lessons on the basics to start trading without making mistakes!
Equipped with the appropriate regulations, it is a broker that tries to fully support its users, providing them with different platforms to adapt to their earning needs.
Learn the best trading strategies with Trade.com (open a free account here) and enjoy the benefits of intraday trading!
Intraday Trading: strategies for the experts
After introducing leverage and stop loss, that is the basic tools to be used to make a correct intraday trading, we mention some important strategies for investing daily. These are a bit more complex techniques, but with the right commitment it will be possible to turn everything around to your advantage!
First of all, we refer to one of the most used techniques for intraday trading on Forex: scalping.
In simple terms, investors decide to open several positions (even simultaneously) that close as soon as there is a fair amount of volatility. In this case, the profits are tied to the single operations.
Scalping is characterized by many open positions for a very short time, even a minute, to make small gains every time. This is a technique that requires the utmost attention, since it is based only on the observation of the graphs and, having little time available, it is necessary to develop short analyzes.
Another perfectly adaptable technique for investors who only open short positions is the breakout.
The idea of this strategy is to take over the market when it is experiencing small phases of rupture, then trying to bypass the resistance and support lines that indicate a change in the trend.
Therefore, hitting a good trend in the restart phase can repay all the efforts made!
Using specific investment techniques, you can take advantage of the liquidity and volatility of the markets on a daily basis!
Furthermore, many investors choose to stay constantly updated on market news, i.e. micro and macroeconomic factors that have a strong influence on currencies, or other listed assets on the market. This allows you to outline the strengths or any stock falls. It’s a good tactic, but it requires constant dedication and even a little intuition!
Read also: Automated Trading.
Intraday Trading: Pros and Cons
Objectively analyzing the risks and positive components of intraday trading can be quite complex, as it really depends on the traders, their skills and the objectives set.
In general, however, there are some obvious advantages and disadvantages.
For example, it is clear that opening short positions is an activity that involves psychological stress, since there is a need to develop strategies very quickly.
However, with intraday trading it is possible to take advantage of even the slightest price variations: a possibility not offered by long-term investments, in which only the large movements in value of the selected assets are considered!
Thanks to trading with CFDs, it is possible to minimize risks by aiming for bilateral gains: by formulating a correct fundamental or technical market analysis, it is possible to record successes even if the market falls! Indeed, in the days of panic selling, those who can do it can make colossal profits.
Day trading is as risky as it is profitable! This means that you need to use all the necessary tools and stay calm if you want to achieve concrete results.
In fact, no investment is ever risk-free: selecting the right trend, weighing carefully before making a trade and closing the position at the right time is essential for successful day traders!
So is taking long positions more profitable than trading daily? The correct answer does not exist: in online trading there is a need to study and be able to understand the current market situation. This allows you to take advantage of the conditions of the securities on which you are betting.
Of course, the main gap that differentiates day trading from multiday trading is only one: the former exposes you to greater risk than the latter.
How much money to invest?
Day trading typically requires both good background preparation and favorable market conditions to take advantage of positive short-term trends.
But what is the capital to be moved to carry out a good job?
Usually, to obtain conspicuous returns you need to have an equally high amount.
Through the best CFD trading platforms, the conditions to be met for investing online are no longer those that make this activity exclusive to a small elite of entrepreneurs.
However, for those who start with low figures using a platform like eToro, they can open an account with only 200 euros.
In this case, it is advisable to focus on a few trends to start, so as to minimize the risk!
In summary, everyone is free to choose the amount to invest, but it is essential not to launch on a single stock without having studied it in depth. This means knowing how to manage your money is the first step to profitable and satisfying intraday trading!
By calculating the potential risks, applying the stop loss and the financial leverage, it is possible not to make mistakes and to overcome any problems related to lack of experience.
Deciding to invest daily, opening short positions can be a source of satisfaction, but it is also a suitable choice for dynamic traders who do not give in to stress.
Remember not to go beyond 10% of your losses and not to treat for more than a few hours a day, so as not to find yourself in unpleasant situations.
With a well-defined trading plan and capital suited to their goals, everyone can feel free to start trading by taking advantage of the daily volatility and liquidity of the markets.
Of course, there is a need to focus on your own purposes by always considering any losses, so as to weigh well before carrying out risky operations.
Those who are not yet ready to invest in real markets can take advantage of the free and unlimited demo account offered by ForexTB: ideal for testing your day trader skills!
It indicates an operating method that provides for the opening and subsequent closing of operations within a day.
Above all, the savings in rollover commissions applied by all brokers when a position passes from one day to the next, after midnight.
It allows you to operate quickly, with little capital and allows you to switch off mentally at the end of the working day.
There are numerous brokers that allow this style of operation to the fullest, eToro above all.