Just what is intraday?
“Intraday” means “during the day.” In the business world, the term is a shorthand way to talk about stocks that trade on markets during regular work hours. Stocks and exchange-traded funds (ETFs) are examples of these assets. The highs and lows that the object hits during the day are also shown by intraday. Short-term or day traders who want to make several deals during the same trading session pay close attention to intraday price changes. When the market shuts down, these traders will close out their bets.
How to Start Trading During the Day
People often use the term “intraday” to discuss a security’s new highs and lows. In this case, “a new intraday high” means that the investment price hit a new high compared to all other prices during the trading session. An intraday high can sometimes be the same as the final price.
Traders use real-time charts to closely monitor hourly price changes and try to make money from short-term price changes. Short-term traders often use hourly charts that are one, five, fifteen, thirty, and sixty minutes long when trading during the market day. One- and five-minute charts are often used for fast dealing in intraday scalping. There are other ways to trade during the day that use 30- and 60-minute charts for deals that need to be held for several hours. Scalping is a trading technique that tries to make money from small changes in the price of a stock by making a lot of trades every day. The intraday trader may keep their options open longer, but they are still taking significant risks.
Volume-weighted average price (VWAP) orders are often used during trading days to improve the efficiency of deal execution by exposing an order to a broader range of prices. VWAP shows the average price a security trades during the business day.
How to Trade During the Day
Traders use a lot of different intraday tactics. Some of these methods are:
Scalping is a way to try to make a lot of small gains from small price changes throughout the day.
Range trading, in which people decide whether to buy or sell based on support and barrier levels
Trading based on news, which usually takes advantage of trading chances when markets are more volatile around news events
High-frequency trading techniques use complex algorithms to take advantage of minor or short-term flaws in the market.
What are the pros and cons of trading during the day?
The best thing about trading during the day is that positions are not affected by bad news that might come out overnight and significantly affect the prices of stocks. Significant economic and earnings reports are examples of this kind of news. So, are broker raises and downgrades done before or after the market closes?
Trading during the day has several other essential benefits. One benefit is that you can use tight stop-loss orders, which means raising a stop price to limit your losses from a long trade. One more is the more accessible access to the margin, which means more power. There are also more chances to learn when traders deal during the day.
There are, however, storm clouds that go along with every bright side. Some problems with intraday trading are that there isn’t enough time for a position to make more money, or sometimes any money. Because traders trade more often, commission costs go up, which cuts into the profit levels they can expect.
Pros
- There is no risk to positions from overnight news or broker moves outside trading hours.
- Positions can be kept safe with tight stop-loss orders.
- Traders who do this regularly can use more capital.
- Many jobs give people more opportunities to learn by doing.
Cons
- When you sell a lot, you have to pay more in commissions.
- Some assets, like mutual funds, can’t be used.
- There might not be enough time for a position to make money before it has to be stopped.
- Losses can add up quickly, especially if you buy things on credit.
- Prices during the day and mutual funds
Trading in mutual funds during the day is not allowed. You can only buy and sell these funds through a broker or the fund’s financial company. They are made for long-term investors. An ETF’s price is only posted once, at the end of the trading day. This price, called the net asset value (NAV), shows how much the fund’s assets have changed during the day minus its debts. It is calculated per share.
Mutual funds don’t offer intraday prices because the market value of their assets changes all day, and their managers decide what to buy and sell. But ETFs, their passively managed cousins, are priced based on how much they are worth on the market at the start of the trading session.
Intraday in the Real World
Any stock price changes are shown on the screen throughout the trading day and summed up at the end. Apple Inc. (AAPL) shares started the day at $174.57 and ended at $178.44 on April 4, 2022. The “day’s range” to the right of the ending price shows that the price of shares went as low as $174.44 during the day and as high as $178.49 during the day.
Day traders and technical analysts who follow Apple would look at the moves in the stock to see if they could find a trend or a big gap, which means a price jump with no trading in between.
Conclusion
Intraday refers to securities that trade on the markets during regular business hours and price changes.
Day traders pay close attention to how prices change during the day and time, and they make moves to make money from these short-term changes.
People who trade during the day use tactics like scalping, range trading, and trading based on news.
