The two most important factors when trading in a single session are volatility and liquidity. Volatility can be defined as the scale of changes in the market. When our investment horizon is short-term, market volatility is a prerequisite for a successful trade. This fact mainly limits the choice of instruments with major currency pairs and several cross-pairs, depending on the trading session. The choice of instruments is also influenced by the intraday trading strategies that you can find on this page above.
Liquidity is the second essential aspect of the intraday trading system. Intraday Forex trading is based on the high accuracy of entry and exit from a trade. For a long-term investor, 10 points are irrelevant. On the other hand, ten pips are sometimes the expected profit for an intraday trader. Accuracy is related to the trader’s skill, but of course, liquidity is also significant when considering single trade trades and the trading strategies chosen. If there is not enough liquidity in the market, you will not be able to close the order at a specific price that has been determined, no matter how well you decide where to enter and exit a trade. This fact limits the trader in choosing the most liquid currency pairs and the right time to trade. Also, the intraday trader must pay particular attention to trading signals.The most popular trading strategies for short-term and intraday trading
Scalping is an intraday trading strategy that aims to achieve profits on minimal price movements. Scalpers “take by the number” of trades, opening them “almost on anticipation,” because in such a considerable market noise, there is no other way Scalping can be exciting, but at the same time very risky. Scalpers must achieve very high efficiency that balances the unfavorable ratio of Profit and Loss. Probably the most challenging part about Scalping is closing losing transactions, which protects the scalper from significant losses. The scalper cannot afford to wait for the market to come back.
If you want to become a scalper, you need to develop the “sixth sense” of the market – look for instruments characterized by high volatility, good liquidity, where orders are executed instantly. If you manage to master this, know that it is potentially the most profitable strategy in any market.
Trading on reversals within the day
This is probably the worst strategy in the foreign exchange market if used by inexperienced investors. This strategy is also known as counter-trend trading. The risk, in this case, stems from the basic principle of following the trend. A trader must be able to identify reversals in the market with a high probability and predict their strength. This requires extensive knowledge and market practice.
Suppose you want to use this type of intraday trading strategy in your Forex trading. In that case, you should learn a lot about Forex and practice using them on a demo account so that your daily trading income outweighs potential losses or in the Forex tester program.
Intraday momentum trading
These are pretty simple intraday Forex trading strategies based on looking for strong price movements combined with high volume and opening positions by this movement’s direction. A high level of discipline is a prerequisite for using intraday trading. Daytrader must wait for the best opportunity to enter the market for an extended period and then monitor the position and exit at the right time.
Intraday trading strategies are often touted as the fastest way to make money in the Forex market. However, the ad does not mention the fact that this is the most difficult Forex trading strategy. Many novice traders try to use them and lose as a result. Developing your effective intraday strategy takes years of training and market experience.
Forex trading within the day (intraday) – what to look for
Intraday Forex trading is the least popular among experienced traders and the most popular among beginners.
If you are a beginner, we have an essential tip for you: avoid trading on lower time frames (below four hours). First, try to consistently make money in the market throughout the year using daily Forex charts. The more experience you gain, the more you can make a profit with smaller and smaller timeframes. If, after all, you want to try your hand at the inside of the day, we have a few tips that might be helpful.
1) Develop a detailed trading plan, then strictly follow its risk management principles. As mentioned earlier, intraday Forex trading is riskier than long-term trading, mainly due to trades’ higher speed and frequency. Day traders are under more pressure and need to make quick decisions and take full responsibility for the outcome. A trading plan is a must for an intraday trader. 2) Don’t average losses. Averaging is simply an increase in losses. To avoid this, cut losses quickly according to your exit strategy. Remember that by averaging losses, you are wasting not only money but also time.