7 Intraday Trading Strategies for Rapid Returns

Intraday trading can be defined as the buying and selling of stocks within the same day. Unlike long-term investments, this approach focuses on capturing rapid price movements in the stock market.

With the right strategy, intraday traders can seize opportunities to make a profit. However, it’s essential to know what you're doing, as trading without a plan can lead to losses.

Here are 7 effective intraday trading strategies aimed at making money in a short time while controlling losses and comprehending the market better.

Top Intraday Trading Strategies for Rapid Returns

Here are seven proven trading strategies that can increase your chances of achieving rapid returns:

1. Momentum Trading Strategy

Momentum trading in intraday stocks is about taking advantage of fast-moving prices. Imagine a stock suddenly jumping up by 3% or more in a few minutes— this signals strong momentum.

Traders look for stocks with high daily trading volumes (like 500,000 shares or more) and use indicators like the Relative Strength Index (RSI) or moving averages to spot strong upward or downward trends. For example, if a stock’s 15-day moving average crosses above its 100-day average, it’s seen as a buy signal.

Momentum trading focuses on getting in and out quickly, allowing traders to capture these short bursts of profit effectively.

2. Breakout Strategy

The breakout strategy involves buying or selling stocks when they move beyond key price levels— either breaking above resistance (for buying) or below support (for selling).

Suppose a stock trading around ₹100 consistently struggles to go above ₹105. If it finally breaks ₹105 with high trading volume, it could signal a strong upward move, making it a buy signal. Studies show that breakout trades can yield returns of 2-5% in a single day if timed correctly.

For intraday traders, spotting breakouts early can mean capitalising on rapid price jumps, often within minutes or hours.

3. Scalping

Capturing tiny price changes throughout the day, scalping is perfect for traders who prefer rapid, high-frequency trades. Imagine placing 10-50 trades in a single session, each aiming to make a profit of just 0.1%-0.5% per trade. While each gain might seem small, these amounts add up over multiple trades.

This strategy thrives in high-volume stocks with minor fluctuations, as quick entries and exits are key. Scalpers usually hold positions for seconds or minutes, making it essential to stay focused and act fast.

This approach works best in stocks with high liquidity and active trading, reducing transaction costs and maximising gains.

4. Reversal Trading

This strategy aims to profit from price direction changes. For instance, if a stock’s price was rising in the morning but showed signs of a downturn, a reversal trader would look to sell or short it. This approach relies on indicators like the MACD (Moving Average Convergence/Divergence) and RSI.

If the RSI crosses 70, it may signal an overbought stock, hinting at a possible price drop. Similarly, if it dips below 30, a reversal might mean an upcoming rise.

Reversal trades often happen within 5-30 minutes, making it a high-potential strategy for seizing short-lived price movements.

5. Gap and Go Strategy

The Gap and Go Strategy is a popular intraday technique where traders look for stocks that "gap" up or down at the market’s open. For example, if a mid or small-cap stock closes at ₹500 the previous day but opens at ₹550 (a 10% gap), it signals strong buying interest.

This strategy works well with Indian stocks showing a gap of 2-5% on high volume. Traders aim to catch this early momentum and profit as the price "goes" further in the same direction.

So, by analysing pre-market data and setting stop-losses, traders can quickly ride these gaps, making gains in a fast-moving market.

6. Range Trading

In intraday trading, buying low and selling high within a set price range can be a smart approach for steady gains.

When a stock’s price moves between specific levels, like between ₹220 and ₹230, traders can buy at the lower end (support) and sell at the higher end (resistance). For instance, take a stock, such as Power Grid share price. If it is bouncing between ₹245 and ₹255, an intraday trader could profit by buying near ₹245 and selling close to ₹255.

This method suits stocks in stable price ranges, helping traders make the most of predictable movements while minimising risks in a calm market.

7. News-Based Trading

In intraday trading, news-based trading can be highly profitable, as stock prices often react instantly to major news. For example, announcements about a company’s earnings, mergers, or new projects can cause its stock to rise or fall sharply within minutes.

In India, stocks like Reliance, TCS, and HDFC Bank are particularly sensitive to news. A positive news release can lead to a 2-3% price jump in just a few hours, while negative news can cause a quick drop.

Staying updated on reliable news sources and being ready to act can help intraday traders capture these quick price changes effectively.

Conclusion

Intraday trading can offer exciting opportunities for quick profits when using the right strategies. Choosing a method that matches your risk level and trading style is key to success. Practising these strategies and studying market trends can improve skills and boost confidence in trading decisions.

Remember, patience and discipline are just as important as the strategy itself, helping you stay focused and make better trades each day.

*Disclaimer: The stocks, companies, and policies discussed above aren't recommendations from Finology Insider but guest content and shall not be construed as a replacement for professional advice. Consult a professional or conduct the necessary research before making investment decisions.