How to Be an Intraday Trader
Intraday traders place trades throughout the day as a way to profit from short-term price movements in a financial market. Before risking any money, a new intraday trader may want to trade with a mentor who has a profitable track record from intraday trading. A mentor can teach a new trader how to identify intraday trading opportunities that have a good potential reward relative to the risk. If the trader cannot find a mentor, trading in a practice or play money account is the safest way to learn how to trade intraday.
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Things You'll Need
- Trading account
- Practice account
- Charting program
- Trading mentor, if necessary
Instructions
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Choose an intraday trading methodology to help you identify potential trades. Do some research to help you decide which trading methodology to use. If you have a trading mentor, use the methodology that he recommends. You can then develop your own trading methods once you learn how to successfully trade intraday.
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Decide which online broker to use for placing your intraday trades. Inquire about the commission that the broker charges for the specific market that you want to trade. For example, some brokers have low commission rates for stocks but not for futures. Open your account with an online broker who has an acceptable commission rate and a reputation for providing quality service.
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Choose a charting program to use for identifying intraday trading opportunities. Install the charting application and set up a chart for each instrument that you plan to trade. Use the charts to backtest your trading methodology. To backtest a trading method, scroll back to the left of a chart as far as possible to see the past prices of an instrument you want to trade. Start to move the chart forward to watch the intraday price movement of the instrument. Identify trade entries and exits using your methodology to see if you would have been profitable for the period that you're checking.
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Use the broker's practice account to verify that your trading methodology works in real time. A practice account uses play money instead of real money. Watch your charts when the market you trade is in session, and place a trade in the practice account using your trading methodology. Set a profit target and also set a stop loss for the trade in case it does not work in your favor. A stop loss is the maximum price you are willing to lose on the trade.
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Trade using your actual account once you are comfortable with your intraday practice account results. Since you are an intraday trader, remember to exit all open positions by the end of the trading session. An intraday trader does not leave a position open overnight.
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Tips & Warnings
Use a laptop computer as a backup. If your electricity goes out, take the laptop to a location that has power so that you can access your trading programs.
If you are not profitable trading in your practice account, do not trade with your actual account. Review your intraday trading methodology to see if you need to make any changes.
References
Resources
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