Intraday Trading

This article is about intraday trading. It will help beginners grasp the fundamental concepts and strategies, and demonstrate how to enhance the effectiveness of intraday trading with the ATAS platform.

What is Intraday Trading?
Pros and Cons
Strategies for Intraday Trading
FAQ
Advantages of Using ATAS for Intraday Trading

The article includes chart examples using advanced indicators from the ATAS platform and includes links to more detailed guides.

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What is Intraday Trading?

The term intraday trading speaks for itself. Trading within a day is characterized by holding a position for a short period, limited to a single trading session.

For example:

you did your analysis in the morning, opened a position, and closed it by evening;
you opened a position right before some big news hit and closed it right after;
scalping on breakout levels: 10 trades, each lasting 5-20 seconds;
bouncing off high-volume levels: 2 trades with durations ranging from 3 to 30 minutes.

These are all examples of intraday trading, where a trader does not carry a position overnight. The workday is over, all positions are closed, orders are canceled, and the trading terminal is turned off until the beginning of the next working day.

Intraday Trading: Pros and Cons

Pros of Intraday Trading

Quick earning potential. Day trading offers traders the opportunity to make profits in a short span, using leverage. You can profit even from small price fluctuations, which are in abundance on 5-minute charts.
Low entry barrier. Getting into intraday trading does not require big capital investments. For instance, when day trading futures, broker margin requirements to secure a position are significantly lower compared to positions carried overnight (or over the weekend).
Risk management. Traders can effectively control their risks by setting stop-loss and take-profit orders. In comparison, in positional trading, a stop-loss might result in a loss much higher than planned due to a gap at the session’s opening.

Cons of Intraday Trading

High complexity. Intraday trading demands a high level of skill and experience to swiftly consider all factors and make trading decisions in conditions of uncertainty.
High Level of “Noise”. The 1-minute and 5-minute charts are filled with random fluctuations, causing intraday traders to close a trade with a loss.
Overtrading. The risk associated with the high workload on analytical and emotional activities can lead to stress, errors in decision-making, and burnout. For more details on the downsides of excessive trading and how to avoid it, check out the article Overtrading for Beginners and Experienced Traders.

Not everyone can be an intraday trader — this is influenced by both personal qualities and circumstances.

To figure out which trading style suits you best, read the article About the Advantages and Disadvantages of 6 Types of Trading.

Intraday Trading Strategies

Developing an intraday trading strategy involves searching for patterns, implementing a trading edge and disciplined risk management, and adapting to the trader’s unique market vision that has already been formed.

The examples on the charts below can inspire you to create your own unique intraday strategy.

Intraday Futures Trading Strategy

The core idea is the price rebound from nodes of significant volume, noticeable on the market profile. In other words, this strategy involves a rebound or a test from the Point of Control (POC) level.

High volume at the POC level indicates increased interest in this level, implying a significant number of trades executed at this price. When the price returns to this level, it triggers market participant activity — they may be closing or increasing positions according to their strategies. Usually, though not always, this leads to a rebound from the significant volume level, which can serve as the basis for creating an intraday trading strategy.

Example 1

E-mini S&P-500 futures One-Minute Chart with TPO Market Profile Indicator.

Before the European session started, the market was in a flat state. Then, a bullish impulse followed (arrow 1).

A pullback to the significant volume level (arrow 2), noticeable on the profile, provided an opportunity to enter a long intraday position.

Example 2

E-mini S&P-500 Futures but on a 15-minute chart with a 6-hour profile indicator.

The example above covers events from two days:

November 20, when there was a sharp rise culminating above 4570;
November 21, when the sentiment was bearish.

Number 1 indicates a test below the significant volume level during the intraday bearish trend. This test provided an opportunity to enter a short intraday position during the European session.

Number 2 indicates the significant volume level formed on November 20. When the price reached it the next day, bears found support, and the intraday downtrend paused for a while. Perhaps, long positions opened on the bounce from level 2 could have been closed at breakeven.

Number 3 indicates another significant volume level formed on November 20. However, a strong bounce occurred from it the next day, providing an opportunity for traders to profit during the American trading session.

Example 3

A 15-minute chart to which a 6-hour profile indicator has been added. This time it is gold futures.

Once again, events from two days, November 21 and 22.

Number 1 indicates a large volume level formed on November 21. During the Asian session the next day, it served as support (with a slight “undershoot”) and the foundation for an intraday uptrend.

Number 2 indicates the culmination of this intraday uptrend during the European session, specifically at the significant volume level (with a slight “overshoot”) formed the day before.

Example 4

An hourly chart to which a daily profile indicator has been added. Euro futures.

Arrows indicate tests of significant volume levels:

Volume levels formed several days earlier but not tested can act as support levels.
After a breakout, a significant volume level can function as resistance.

Tips for implementing the intraday trading strategy:

Choose the timeframe and instrument that align with your perspective and personal circumstances.
Always employ risk management measures. For example, set stop-loss orders beyond areas of significant volume, as it is never certain that a rebound will occur.
Switch to lower timeframes and/or use cluster charts to obtain indications confirming a potential rebound.
Explore historical data. Practice intraday trading using Market Replay.

False Breakout Strategy

As we know, the market is always in one of two states:

Flat. When supply and demand balance each other. The market profile shows a growing “convexity,” indicating a consensus between buyers and sellers regarding the fair price of the traded commodity.
Trend. When the market is no longer balanced due to external factors, such as the release of important news. One of the forces—either demand or supply—outweighs the other.

The exit from the flat zone is marked by:

encouraging traders to enter new positions in the potential direction of the trend;
traders facing psychological pressure if the price moves against them. They are forced to reduce or close existing positions manually or automatically through a stop-loss order.

These actions serve as potential “liquidity traps” by market participants, especially those who specialize in trading false breakouts. It is worth noting that these participants may actively contribute to the occurrence of these false breakouts.