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As an intraday trader, you want to pick the market direction early.
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The simplest way to do this is by identifying the 'value area' for the stocks you target to trade in. This can help you make a trade decision.
Experts call this 'The 80% rule'.
Value area is the range of price where at least 70% of the previous day’s trade took place. Once you have identified this area, observe where the price opens for the day.
The rule states that if the price starts below the range and stays there for the first hour, then there is an 80% chance that it will rise into the area.
On the other hand, if it starts above the value area and stays there for the first hour, there is an equal chance that the price will fall into the area.
This gives us the most basic intraday trading strategy, if the stock starts above and stays there, you may want to take a short position near the top of the value area.
Similarly, if the stock starts below the value area and stays there for an hour, you can take a long position near the bottom of the value area.
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Few popular trading Indicators
Traders often face difficulties with concurrent events occurring in intraday trading. Whether a person is an experienced trader or a beginner, looking at the trends and indicators is always beneficial for everyday trading. Let us look at some indicators :
Moving Average
Most traders rely on the daily moving average (DMA) of the stocks. The moving average is a line on the charts that show the behavior of a stock over a period of time.
These charts show the opening and closing rates of the stock.
The minimum average line shows the average closing rates of that particular stock in the given interval and helps you comprehend the ups and downs in the price and determine the flow of the stock.
Bollinger Bands
These are bands that show the standard deviation of the stock. It consists of three lines - the moving average, the upper limit and the lower limit.
If you seek the trading ranger of a particular stock, these help you locate the price variation of the stock over a period of time, hence, you can put your money around the observations.
Momentum Oscillators
The stock prices are highly volatile. Such variations largely depend on market situations. If a trader wants to know whether a stock would rise or fall, this is where the momentum oscillator is beneficial.
It is depicted in a range of 1 to 100 and shows whether a stock would further rise or fall, helping you in determining when to buy a particular stock. It shows the right time to trade, not making you lose your chances.
Intraday Time Analysis
When it comes to variations and movements in intraday trading, the most helpful tools are the daily charts.
These can provide all the necessary information about the stocks with indicators that show the trend of any particular stock over a definite period of time.
They convey the movement of the prices from the start to the close of market. Time analysis becomes a useful tool for intraday trading as the momentum tends to shift quickly. You won't be able to comprehend the charts before the stock you put your money in goes down steeply or shoots right up.
Hence, it becomes necessary for day traders to look for such charts that would help you understand the flow better - we’ve covered these concepts extensively in things to know while investing in Intraday Trading.
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Wrapping Up
Intraday Trading is done not with the interest of investment, but with the motive of quick profit.
Common indicators which prove to be helpful for traders are Moving Average, Bollinger Bands, Relative Strength Index, Momentum Oscillators.
It is advisable to avoid volatile stocks. Traders should look out for stocks which are correlated with major sectors.
Research and following the trends prove vital for a trader, may they be a beginner or a professional.
Accurate trade formula = To make sure profits = backtested more than 5 years
a simple trade formulas for high accuracy intraday
https://bit.ly/3zPBmKu
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