In the fast-paced world of finance, the term "intraday" is a buzzword used to describe securities that are traded on the markets during regular business hours, showcasing their highs and lows throughout the trading day. For day traders, intraday movements hold a special significance, as they diligently monitor these price fluctuations with the hopes of reaping quick profits. In this article, we will delve into what intraday trading is, its underlying principles, and the strategies that power it.

What Is Intraday? Intraday, a term derived from "within the day," is used to characterize securities, such as stocks and exchange-traded funds (ETFs), that are actively traded during standard business hours. This classification extends to the dynamic price variations that these assets experience throughout the trading day. Intraday trading specifically caters to short-term traders who aim to execute multiple trades within a single trading session. These traders typically close all their positions by the market's close.

The Basics of Intraday Trading Intraday trading chiefly revolves around tracking the new highs and lows of a particular security. For instance, an "intraday high" refers to the moment when a security reaches its peak price during a trading session, and, in some instances, it may align with the closing price.

Day traders rely heavily on real-time charts to closely follow intraday price movements, all with the aim of capitalizing on short-term price swings. These traders usually deploy one-, five-, 15-, 30-, and 60-minute intraday charts. Intraday scalpers, who seek to profit from small price fluctuations, often utilize one- and five-minute charts, which enable rapid trading. Meanwhile, other intraday trading strategies may employ 30- and 60-minute charts for trades with longer hold times. Although scalping involves executing numerous daily trades, it carries high risks.

Intraday Trading Strategies Intraday traders employ a range of strategies to navigate the dynamic market environment. Some of the prominent intraday strategies include:

1. Scalping: This strategy focuses on making multiple small profits by capitalizing on minor price fluctuations throughout the day.

2. Range Trading: Range traders rely on support and resistance levels to make buy and sell decisions, identifying price boundaries within which a security tends to trade.

3. News-Based Trading: News events often create increased market volatility, presenting opportunities for traders to make swift, decisive moves based on breaking news and its impact on asset prices.

4. High-Frequency Trading: High-frequency trading employs sophisticated algorithms to exploit short-term market inefficiencies, executing a large number of trades in a fraction of a second.

Advantages and Disadvantages of Intraday Trading Intraday trading offers several advantages, with the primary one being immunity to overnight news risks that can significantly impact asset prices. Traders can employ tight stop-loss orders to minimize losses and leverage their positions. Intraday trading also provides a wealth of learning opportunities.

Nonetheless, it's essential to acknowledge the downsides. Frequent trading leads to increased commission costs, potentially eroding profits. Some assets, like mutual funds, are off-limits for intraday trading. Moreover, there might not be enough time for a position to generate profits before it must be closed out. Additionally, the use of margin to finance trades can lead to rapid losses.

Intraday Pricing and Mutual Funds Intraday trading is incompatible with mutual funds, which are designed for long-term investors and are bought and sold only through brokers or the fund's investment company. Mutual funds post their price once a day, at the close of the trading session, known as the net asset value (NAV).

Conversely, exchange-traded funds (ETFs), the passively managed counterparts of mutual funds, are priced based on their intraday market value within a trading session.

Real World Example of Intraday For a tangible illustration, consider the stock of Apple Inc. (AAPL) on April 4, 2022. It opened at $174.57 and closed at $178.44. Throughout the day, AAPL reached an intraday low of $174.44 and an intraday high of $178.49. Traders and technical analysts scrutinize these price movements to identify patterns and gaps in the stock's performance.

In summary, intraday trading is a dynamic and fast-paced approach to capitalizing on short-term market movements. It demands vigilance, strategy, and a comprehensive understanding of the various intraday techniques available. Day traders must weigh the advantages and disadvantages carefully to determine whether intraday trading aligns with their investment goals and risk tolerance.

Tickeron's Offerings

The fundamental premise of technical analysis lies in identifying recurring price patterns and trends, which can then be used to forecast the course of upcoming market trends. Our journey commenced with the development of AI-based Engines, such as the Pattern Search Engine, Real-Time Patterns, and the Trend Prediction Engine, which empower us to conduct a comprehensive analysis of market trends. We have delved into nearly all established methodologies, including price patterns, trend indicators, oscillators, and many more, by leveraging neural networks and deep historical backtests. As a consequence, we've been able to accumulate a suite of trading algorithms that collaboratively allow our AI Robots to effectively pinpoint pivotal moments of shifts in market trends.