What are Forex intraday strategies? It features intraday trading, its advantages, and its disadvantages. Practical examples of intraday strategies
Intraday trading is a type of trading in which a transaction is kept open for no more than 24 hours. For analysis, any timeframe can be used, but the most common intervals are H1 and H4. Unlike scalping, transactions are open for several hours – this allows you to evaluate the market situation without emotions and rush, and at the same time not to be too smart. It does not require a large deposit if you avoid moments of local volatility. You will learn more about the specifics of intraday Forex trading, its advantages, and disadvantages with practical examples of strategies in this review.
Intraday strategies: how to make money slowly and have fun
Intraday trading strategies are also called intraday trading. They provide for the opening and closing of transactions within the day. To analyze the market, timeframes from M30 to H4 are used, although the most common timeframe is H1. No one forbids the use of other intervals, but the rule is one: the transaction opens and closes within one day.
In this review you will meet:
- With the peculiarities of the specifics of intraday trading.
- With the advantages and disadvantages of intraday trading.
- With practical examples of strategies for classic and combined indicators.
Everything You Wanted to Know About Intraday Strategies
Intraday strategies are a favorite type of trading for novice traders. There are no restrictions on the part of the broker, who often makes complaints about scalping. Price noise is partially smoothed out (local chaotic two-way movements are removed), wave patterns are visible. And most importantly, there is no need to make hasty decisions, but at the same time, you do not need to wait long for the result.
Intraday trading is speculative in nature, therefore, in most cases, currency pairs act as an instrument. Stock CFDs and commodity assets are more suitable for long-term strategies with keeping the transaction in the market from 3-5 days. But cryptocurrencies are an ideal tool for intraday trading: scalping with them is not profitable because of the large margin, “long-term” – unjustified risks. But the daily volatility of 3-5-10% per day is quite able to please far-sighted traders.
The most common questions on intraday trading:
1. How much can you earn in 1 day?
- The question is rhetorical. Much depends on the frequency of opening deals, on how much they are in the market and on luck. According to statistics (taken from several trading forums), about 30-32% per week earns up to 100 points (20 points per day), 25-27% – 100-200 points (20-40 points per day), 10-12 % – 200-300 points. Compared to long-term strategies, where the average daily income can be 50-100 points, this is not so much. But it is worth considering the frequency of the signals.
2. What is the minimum deposit needed?
- Pure math. You can take 20-30 points per day (we take the average result, although you should not count on it every day), this can be based on when calculating the amount of deposit and the volume of transactions. This means that with a transaction volume of 10,000 dollars. The US per day, you can earn 20-30 dollars. The USA. Is it a lot or a little? Compare the time spent on trading and compare the income with the salary in other industries in your country. I only note that to have 10,000 dollars. The United States is not necessary, with a shoulder of 1: 100, 100 dollars is enough. The USA. But let me remind you that according to the rules of risk management, no one enters the market for 100% of the deposit. Because of the calculator in hand – and count yourself.
3. How many can (need) to open transactions per day in order to achieve a minimum level of income?
- The question is frequent but obviously wrong. It is necessary to strive not for the maximum number of transactions but to maintain a balance of risk and profitability. Sometimes it’s better to open one deal and squeeze the maximum out of it with the help of training and constant observation than to open 2 or more deals, scattering attention. The goal should be daily profit in points or in money terms (each has its own target level). And do not forget that there are also unprofitable transactions, the loss of which must be closed. According to statistics, daily strategy traders manage to open 3-5-10 transactions, but they do not have to be done once. On one pair, 1-3 signals per day may appear, therefore it makes sense to consider several pairs with direct correlation at the same time.
4. How many hours do you need to spend on the computer?
- The question is rhetorical. The apparent profit calculated above is $ 20-30. USA per day seems small. But the trader is not required to sit at the monitor for all 8 hours of the working day? It’s enough for someone to search for signals 10 minutes per hour, for someone less or more. The answer to this question you can get only empirically.
5. What are the best currency pairs to trade intraday?
- There is no answer to this question. Everyone wants to earn on volatile pairs with a corridor of 80-120 points per day. Only this range the price per day can go several times, breaking feet and dropping at a loss. Definitely worth being careful with the “exotic”, but otherwise – once and for all is not necessary.
There are several unspoken rules for intraday trading. The first of these concerns the moments of opening and closing transactions in relation to the weekend. We miss the first two hours of the European trading session on Monday. After the weekend, the market may open with a gap (price gap), traders only get in the picture and plan weekly plans. The first hours of Monday are the least predictable, only then the market enters into the usual rhythm. A similar thesis applies to Friday. Before the weekend in the last hours, there is a massive closure of transactions in order to avoid swap and fundamental risks.
The second rule – we take into account the volatility of the instrument in a given session. With the H4 timeframe, open trade is likely to hook the second session, where trading volumes can be completely different. In Asia, pay attention to JPY, in Europe – on European currencies.
Benefits of intraday strategies:
- No swap costs. At intervals of H1-H4, the deal closes after 1-2-3 candles (sometimes after closing the current one). There is no fee for transferring a position.
- Moderate emotional stress. Unlike scalping, the signal candle here is at least 30 minutes. This is quite enough not to be too smart and have time to look at the main trends, putting fundamental analysis on the technical analysis.
- Optimal profit potential. In the “long-term” it needs to wait more than a day, in scalping, there is a big risk of loss. In terms of the balance between potential profit and risk, intraday strategies are ideal.
Disadvantages of intraday strategies:
- Spread The more trades, the greater the spread. And if in long-term strategies it is almost invisible, then on intraday transactions it is noticeable. By the way, making a plan of “20 points per day”, for some reason they forget about the spread.
- Risks We are not talking about full smoothing. While long-term speculation strategies are less affected, it is intraday trading that they are most affected. Speculators prefer quick profits.
- Time. In comparison with long-term strategies in day trading, you need to be at the computer longer, monitoring the movement of quotes. Although it is individual.