Intraday trading, also known as day trading, is a short-term trading strategy where traders buy and sell financial instruments within the same trading day. The goal is to profit from small price movements by taking advantage of market volatility. Unlike swing or position trading, no trades are left open overnight.

Understanding Intraday Trading

Intraday traders aim to capitalise on short-term price fluctuations in stocks, forex, commodities, or indices. They use technical analysis, price action, and trading indicators to make quick decisions.

For example, a trader might buy Tesla (TSLA) stock at $180 in the morning and sell it at $185 a few hours later for a profit.

Key Features of Intraday Trading

• Short Holding Period – Positions are closed within the same trading session.
• High Leverage Usage – Many intraday traders use leverage to amplify profits (and risks).
• Quick Decision-Making – Requires fast execution based on price movements.
• Market Volatility Dependency – Profits come from rapid price changes.

Common Intraday Trading Strategies

1. Scalping

• Focuses on capturing small price movements multiple times a day.
• Trades last from a few seconds to minutes.
• Requires high liquidity and low spreads.

2. Momentum Trading

• Involves riding strong price trends driven by high volume.
• Traders enter positions when breakouts occur.

3. Breakout Trading

• Identifies key support/resistance levels.
• Buy when price breaks above resistance, sell when it breaks below support.

4. Reversal Trading (Counter-Trend)

• Looks for overbought or oversold conditions.
• Uses indicators like RSI and MACD to spot trend reversals.

5. News-Based Trading

• Trades based on economic news, earnings reports, and geopolitical events.
• High-impact events like Non-Farm Payrolls (NFP) create volatility.

Best Indicators for Intraday Trading

• Moving Averages (MA) – Identifies trend direction.
• Relative Strength Index (RSI) – Detects overbought/oversold conditions.
• Bollinger Bands – Measures price volatility.
• MACD (Moving Average Convergence Divergence) – Confirms momentum shifts.
• Volume Indicators – Helps track buying/selling pressure.

Intraday Trading vs. Other Trading Styles

Feature	Intraday Trading	Swing Trading	Position Trading
Holding Period	Within a day	Days to weeks	Weeks to months
Leverage Use	High	Medium	Low
Market Dependency	High volatility needed	Trend-following	Fundamental-driven
Risk Level	High	Moderate	Low
Strategy Type	Technical & price action	Technical & fundamental	Mostly fundamental

Advantages of Intraday Trading

• No Overnight Risk – Avoids price gaps from news or events.
• Quick Profit Potential – Short-term moves can generate frequent gains.
• Leverage Benefits – Amplifies returns (but increases risk).
• Multiple Trading Opportunities – Can take multiple trades daily.

Disadvantages & Risks

• High Stress & Emotional Pressure – Requires constant focus.
• Significant Loss Potential – High leverage can magnify losses.
• Market Volatility Dependence – Low volatility days reduce opportunities.
• Frequent Trading Costs – Commissions and spreads can erode profits.

Best Practices for Intraday Trading

• Use a Trading Plan – Define entry/exit strategies before trading.
• Follow Risk Management – Keep risk per trade below 1-2% of capital.
• Avoid Overtrading – Taking excessive trades increases losses.
• Choose High Liquidity Assets – Trade instruments with tight spreads.
• Control Emotions – Avoid impulsive trades after losses.

FAQs

What is intraday trading?

Intraday trading is buying and selling financial instruments within the same day to profit from price movements.

Is intraday trading risky?

Yes, it involves high risk and volatility, making risk management essential.

What is the best strategy for intraday trading?

Scalping, breakout trading, and momentum trading are popular strategies.

Which indicators work best for intraday trading?

Moving Averages, RSI, MACD, Bollinger Bands, and Volume Indicators are commonly used.

Can beginners do intraday trading?

Yes, but it requires practice, market knowledge, and discipline. Beginners should start with a demo account.

How much capital is needed for intraday trading?

Depends on the asset, but $500–$5,000 is a common starting range.

What are the best markets for intraday trading?

Forex, stocks, commodities, and indices with high liquidity and volatility.

Does leverage help in intraday trading?

Yes, but excessive leverage increases the risk of losing capital quickly.

How long do intraday trades last?

Anywhere from a few seconds to several hours, but all trades are closed before market close.

Can you become rich from intraday trading?

It is possible but requires skill, discipline, and experience. Most beginners lose money initially.

Intraday trading can be highly rewarding but demands quick decision-making, risk management, and emotional discipline. Proper strategy execution and patience are key to long-term success.