Intraday trading, also known as day trading, is a short-term trading strategy in which traders buy and sell financial instruments within the same trading day. This approach aims to capitalise on price movements without holding positions overnight and into the next trading day. It’s a popular trading approach with anyone looking to maximise quick returns and is used by professional, institutional traders.
Day trading for beginners can be a steep learning curve, requiring time, discipline, and an understanding of technical analysis. Traders will need to monitor markets actively throughout the day and then react quickly to price changes using various tools to make informed decisions. Day trading strategies depend on fast execution, low transaction costs, and reliable platforms to be effective.
This guide to intraday trading for beginners looks at what is day trading, how it works, as well as what makes it distinct from other approaches such as swing and scalp trading It examines the core concepts and the different types of financial markets where they might be applied, such as stocks, indices, forex, and cryptocurrencies. We’ll also look at day trading strategies and when they might be effective, including momentum, breakout, and range-bound trading.
Finally, successful day trading requires the right platform and technical tools; this guide sets out what to look for.
What is Day Trading and How Does it Work?
As the name suggests, day trading involves buying and selling financial instruments on the same day. All positions are opened and closed before the end of trading, ensuring there is no overnight exposure. Day traders aim to take advantage of short-term price movements and use real-time data and advanced technical analysis to make quick decisions.
Day trading occurs across different markets, including volatile markets such as forex and cryptocurrencies. However, beginners looking at how to start day trading will often begin with stocks, or even indices, which, while being liquid, generally demonstrate less volatility. The intraday trading time varies depending on the particular market, with forex trading around the clock during weekdays. On the other hand, stock markets have specific opening and closing times.
Any serious day trading guide will emphasise the importance of tools such as charting software, live market data, and platforms with low latency for successful trade execution. Most successful day traders follow strict day trading rules and incorporate a range of risk management techniques into their strategies. These will typically include stop-loss orders and defined positions.
Intraday Trading Strategies Every Beginner Should Know
Successful day traders use disciplined intraday trading strategies that are targeted to align with how the market is behaving. Here are some of the most common that traders will typically use:
- Trend Following
Traders using a trend-following approach identify the direction of a prevailing market trend using moving averages, trendlines, and indicators like ADX to confirm its strength. If a stock consistently reaches higher highs, a trader could enter long positions on pullbacks.
- Breakout Trading
Breakout trading follows price movements beyond key support or resistance levels. Traders look for high volume when a breakout occurs, and entry will be made just above resistance or below support with tight-stop losses.
- Range Trading
Range trading is ideal in markets that lack a clear trend. Traders use oscillators like RSI or Stochastic to time entries, buying near support and selling near resistance.
- Momentum Trading
When there’s a strong price movement in one direction, perhaps being driven by news, earnings, or market sentiment, day traders aim to capture that movement. Momentum traders may use MACD and RSI to confirm momentum and manage exits.
- Scalping
Scalping involves executing multiple small trades throughout the day to profit from minor price movements. It relies on speed, discipline, and tight spread. You can read our full beginners guide to scalping here.
All intraday trading strategies need to include a range of risk controls. This might include stop-loss orders to limit downside, position sizing to manage risk exposure, and volatility targeting to adjust trade size depending on market conditions.
Best Day Trading Markets – Stocks, Forex, Crypto & More
Different markets offer different potential for day traders. Each market has unique characteristics that can suit different trading styles, appetites for risk, and time commitments.
Here’s a brief guide to the best markets for day trading:
- Stocks
Day trading stocks is popular with beginners. News volatility, such as earnings reports and economic information, can create sharp price movements that offer opportunities for day traders. The best stocks for day trading will often have high volume and liquidity to facilitate quick entries and exits. This typically includes big tech companies and biotech firms, among others.
- Forex
Forex day trading is highly liquid and involves trading popular currency pairs such as EUR/USD. With 24-hour access and significant leverage, forex day trading strategies appeal to traders looking for frequency and flexibility with their trades.
- Crypto
Cryptocurrencies like Bitcoin and Ethereum can be extremely volatile and have 24/7 availability. Crypto day trading has high risk-reward potential, but requires extra caution due to regulatory shifts, sudden news, and the risk of market manipulation.
- Indices
Day trading indices such as the S&P 500 or FTSE 100 allows traders to capture broader market moves. These generally demonstrate smoother patterns than individual stock, making them a good choice for traders looking for reduced company-specific risk.
- Futures & Options
Markets such as oil, gold, or index futures provide speed and leverage potential. Day trading the futures and day trading options are more advanced intraday trading strategies due to their complexity and rapid price changes. Despite this, these markets can be profitable with correct risk management.
Different markets suit different trading goals, styles, and overall risk tolerance. While some traders thrive in the fast-paced world of forex day trading, others may prefer a more strategic and less volatile environment such as day trading indices.
Best Day Trading Platforms, Apps, and Tools
Choosing the best day trading platform is crucial to your success as a day trader. The ideal platform should combine speed, precision, and advanced tools that help you make quick, informed decisions.
Important features to look for include fast order execution, real-time market data, and charting tools with popular indicators such as RSI, MACD, and Bollinger Bands. Mobile day trading apps allow traders to monitor and manage their positions on the move.
MetaTrader, TradingView, and ActivTrader all provide the kind of reliable, robust performance that day traders need, offering flexibility and compatibility with various devices.
If you’re new to day trading, look for platforms that provide a demo account to practice before you risk real capital. Before you commit funds, it’s always wise to test different strategies in a risk-free, simulated environment, then transition to live markets where you become more practised and confident.
You can find out more about the best day trading platforms in our guide.
Day Trading Rules, Tips & Best Practices
Successful traders set a few key day trading rules to guide their day trading:
- Be Consistent
The most important tip is consistency. Don’t jump from one approach to another chasing your losses, as this can further compound your losses. Whether you follow trends or opt for a momentum trading strategy, consistency builds confidence and discipline, giving you a better chance of returning profits over time.
- Set Daily Risk Limits
Set and stick to daily risk limits. Risking only a small percentage of your capital with each trade can help to preserve your account during losing streaks. Resist the temptation to overtrade, particularly after a loss or a win. Beginners often make costly mistakes chasing the market and acting on impulse.
- Keep a Trading Journal
A trading journal where every trade, the entry, exit, reason for entry, and result, can help you to identify what works and what doesn’t. Over time, this can become a valuable learning tool. Other intraday trading tips include only trading during peak market hours when there’s greater liquidity and remembering to take breaks to avoid decision fatigue.
FAQS - Day Trading For Beginners
What is day trading?
Day trading is buying and selling assets within the same trading day to profit from short-term price moves.
What is intraday trading?
Intraday trading is another name for day trading. It refers to trading positions opened and closed on the same day.
How to start day trading?
Start with a demo account, learn basic day trading strategies, and choose a reliable trading platform, like ActivTrader.
What are the day trading rules?
Use stop-loss orders, manage risk per trade, and avoid overtrading.
What’s the best time for intraday trading?
High-volume periods like when your chosen market opens offer the best volatility and liquidity.
Is intraday trading good for beginners?
Beginners can day trade if they commit to educating themselves and developing their self-discipline. Carefully select markets and strategies, and practice with a demo account before risking your own capital.
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