How to Trade in Intraday Trading
Key Highlights
- Intraday trading means buying and selling within the same trading day to capture short-term price moves.
- Use a clear plan: entry, stop loss, target, position size, and exit rules.
- Set up the right tools: trading account, charting platform, fast internet, and reliable data feed.
- Manage risk: risk only a small percentage per trade and use stop-loss orders.
- Start with simple strategies: momentum, breakouts, and pullback trades.
- Practice on a demo account first and keep a trading journal for continuous improvement.
Introduction
Intraday trading (also called day trading) is buying and selling financial instruments within the same trading day. It attracts beginners because trades close before market close, avoiding overnight risk. However, successful intraday trading requires discipline, clear rules, and basic tools. This guide explains the core concepts, step-by-step setup, beginner-friendly strategies, and practical tips so you can start trading with confidence and manage risk like a professional.
Get Pro Setup Now
Before placing your first intraday trade, confirm you have the essentials: a trading account that supports intraday orders, an intuitive charting platform with fast data, a stable internet connection, and a distraction-free workstation. Consider a second monitor or split-screen layout to watch charts and orders simultaneously. Use a demo or paper-trading mode to test your setup and strategy for several weeks before funding a live account.
Understanding how to trade in intraday trading
What It Means
Intraday trading means opening and closing positions on the same day. You never hold positions overnight. The goal is to profit from short-term price movements using technical and market information. Traders often rely on price action, indicators, and order flow to make quick decisions.
How It Works
Typical intraday trading flow:
- Pre-market: review news, economic events, and watchlist candidates.
- Market open: observe volatility and identify early trends or reversals.
- Entry: place an order based on your signal (breakout, momentum, mean reversion).
- Risk control: set a stop loss and define position size before entry.
- Exit: take profit at your target or follow rules to lock in gains or limit losses.
Orders you’ll use most are market orders (immediate) and limit orders (specific price). Use stop-loss orders to automate downside protection.
Key Features and Benefits
Main Features
Intraday trading is characterized by short holding times, frequent trades, and reliance on technical analysis. Key features include:
- High intraday liquidity — choose assets with strong volume.
- Fast decision-making — trades are often executed within minutes or hours.
- Leverage and margin — increase exposure but also risk.
- Technical indicators — moving averages, RSI, Bollinger Bands, and volume-based tools.
Benefits for Beginners
Benefits include immediate feedback (you see results same day), controlled overnight risk, and many opportunities to learn pattern recognition. With a disciplined plan, beginners can build skill and a consistent process without large long-term commitments.
Essential Requirements Before You Start
Accounts, Tools, and Basic Setup
Open an account that allows intraday trading and offers competitive transaction costs. Use a charting platform with real-time data, drawing tools, indicator overlays, and order placement from charts. Ensure you have a reliable internet connection and basic hardware like a dedicated computer or laptop. Organize a watchlist focused on liquid instruments with clear spread and volume.
Important Resources Needed
Essential resources include an economic calendar, market news feed, historical price data for backtesting, and an online community or educational materials. Keep a trading journal template to log entry time, price, stop, target, rationale, and outcome for each trade.
Step-by-Step Guide
Step 1: Learn the Basics
Study price charts, candlestick patterns, and basic indicators. Understand order types (market, limit, stop). Learn position sizing: a common rule is to risk 1% or less of your trading capital per trade. Example: with 5,000 capital, risk 50 per trade. If your stop loss is 1% away from entry, position size = 50 / 1% = $5,000 × 0.01 = 5,000 units worth — adjust for price per share/contract.
Step 2: Select the Right Options/Stocks
Pick liquid stocks or contracts with tight spreads and consistent intraday movement. For options, choose near-term contracts with enough volume and sensible implied volatility. Key filters: average volume, price volatility (ATR), and recent news or catalysts. Build a small watchlist of 5–10 instruments to monitor each session.
Step 3: Apply Strategies
Start with simple, repeatable strategies like momentum breakouts, pullback entries to moving averages, or mean reversion at support/resistance. Define clear entry conditions, stop-loss placement, and profit targets. Example momentum trade: buy when price breaks above the recent high on increased volume, place a stop below the breakout bar, and target a 1.5:1 reward-to-risk ratio.
Step 4: Manage Risk Effectively
Use stop losses on every trade and size positions so a single loss does not harm your account significantly. Set daily loss limits — if you lose a predefined amount, stop trading for the day. Keep emotions in check by following your plan and recording deviations for review.
Popular Strategies
Beginner-Friendly Methods
- Breakout Trading — enter when price moves beyond a recent high/low with volume.
- Pullback Trading — wait for a small retracement in a trend and enter near moving average support.
- Momentum Trading — ride rapid moves driven by news or market sentiment, using tight stops.
- Scalping (basic) — take small profits on quick moves; requires speed and low costs.
| Indicator | What It Shows | How to Use It |
|---|---|---|
| Moving Average | Smooths price trend | Use crossover signals |
| Bollinger Bands | Shows volatility | Upper = overbought, Lower = oversold |
| RSI | Momentum strength | Above 70 = sell zone, Below 30 = buy zone |
Additional Tips
Keep charts clean — too many indicators create confusion. Focus on a few timeframes: a 1–5 minute chart for entries and a 15–30 minute chart for context. Maintain discipline: follow rules for entry, stop, and target. Review your trades weekly to identify patterns and weak points. Control costs by choosing instruments with low transaction fees relative to expected profit.
Conclusion
Intraday trading can be rewarding, but it demands preparation, practice, and strict risk control. Start small, use a tested plan, and refine strategies through recorded results. Over time, discipline and consistent process beat luck. Use this guide as a framework: set up your tools, learn core strategies, protect your capital, and keep improving.
FAQ
Q: How much money do I need to start intraday trading?
A: You can start with a modest amount, but make sure it covers minimum position sizes and transaction costs. More important than capital is proper risk per trade and consistent position sizing.
Q: How many trades should I take per day?
A: Quality over quantity. Take only trades that meet your criteria. For beginners, 1–5 well-planned trades per day is reasonable.
Q: What is the best time of day to trade?
A: Volatility is usually highest at market open and close. Many intraday traders focus on the first 1–2 hours and the last hour for opportunities.
Q: Should I use leverage?
A: Leverage increases both gains and losses. Use it cautiously, understand margin rules, and avoid over-leveraging until you have consistent results.