Intraday swing trading is a strategy for traders trying to buy from the bottom or sell from the top against the current several-hour trends. The best performance traders can get if they follow a significant time frame trend (H4 or daily chart) and trade swing trade against the hourly trend. But a trader can buy or sell against the significant trend if the price is on a meaningful level (for example, yearly or monthly low or high).
Intraday swing is a trading strategy that can use trend trading, swing trading, and day trading combination to enable the trader to buy or sell any financial instrument after a pullback. Swing trading does not mean only purchase or sell against a significant trend. But we will talk later about complicated intraday swing trading strategies.
In the first step, we will try to analyze significant types of trading.
The best strategy for beginners is to study these three main active types of trading. These types of active trading are;
- Day trading.
- Swing trading.
- Intraday Trading.
The distinguishing factor between these three types of trading is the duration. Each represents the length of time one holds an open market position. Let us study in detail the difference between the three.
What is Intraday swing?
Intraday swing represents a trading strategy where the day trader waits for a pullback of the significant trend, enters into trade, and keeps trade for either a few hours (intraday trading) or several days (swing trade).
This is the trading activity that takes place within a concise time frame, as the name suggests, “intraday.” Intraday traders are mostly referred to as day traders. The trading period is mainly in the form of seconds, minutes, or an hour time. The intraday traders always open and close the trade on the same date to capitalize on rapid fluctuation in exchange rates.
The intraday activity comprises very many trade strategies since they are mostly rooted in technical analysis. These strategies include;
Scalping: scalping is a trading strategy to generate profit from a slight price change in the stock price or currency value. Traders involved in dealing with several trading units believe that the slight difference in each unit of exchange’s price leads to a substantial amount at the end of the day when dealing with several trading units. Traders practicing this method are called scalpers. They always employ an exit strategy to evade possible losses that may be incurred from continuous trading.
High-frequency trading (HFT): High-frequency trading is a kind of algorithmic trading mode that involves high-speed trading with high turnover. This is done mostly by the use of developed electronic systems integrated with financial software. This kind of trading system always works with short-term investments.
Order flow analysis: this kind of analysis can be described in the form of a game. This is a game within a game’. This is the trader’s strategy following the game rules but not based on other traders’ market decisions.
Intraday strategy always relies on these factors so that its small profits can be used to realize maximum profits by limiting the risks.
Day trading (short time trading)
Contrary to intraday trading, day trading involves dealing with high volumes of trading units, identified early in the trading day and then executed session by session. The popular types of trading for daily time frame are;
Trend following: this is taking advantage of short-term, medium, or long-term moves that appear to be playing out in various markets.
Momentum: momentum trading is when the trader acquires and sells depending on the recent strength on the price strength.
Range: this is the strategy where a trader considers over-bought and over-sold areas. They buy the oversold and sell the overbought areas.
The day trading markets are described by inherent volatility and range, while intraday trade relies mostly on liquidity and daily analysis.
Swing trading is the act of buying and selling securities that focus on profiting off changing trends in price action. The determinant the swing trading is that the positions are held through an independent session at a time. The trading takes place everywhere between six days or several weeks. The swing trader needs to adhere to the following considerations.
Carry and finance costs: this is the cost of storing physical commodities, which can also constitute insurance costs.
Systematic risk exposure: this is the risk that can affect the entire commodities in the market. It can also be referred to as “undiversified risk.”
Account for extensive margin requirements: extensive margin is the range to which the resource is applied or utilized. An example is when several individuals carry a certain task that falls under a certain extensive margin.
Swing trading is characterized by its popular application in the determination of agricultural futures and forex. Central bank policies, seasonality, and corporate earnings usually employ this policy in conducting their trade operations.
The trading type is the key factor depending on the available resources, market size, and personal traits to achieve the market goals and success in trading. However, any type of trade is applicable and productive.
Intraday trading vs. swing trading
The difference between intraday trading and swing trading is that intraday trading represents trading that makes many trades in a single day, and swing trading occurs over days or weeks.
Intraday Swing strategy explanation
Daily personal analysis is also a key factor in trading. Since you are the only important factor in your business, you should make sure to analyze your daily activities, daily feelings, and deviation in profit-making and note down in your daily diary. Having these basic factors at hand, one can explore different trading strategies in the trading field. Beginner traders can encounter most difficulties in deciding the kind of trade methodologies to use.
This struggle to discover different ways to succeed depends on how often the new trader researches these three trading activities. For the active futures trader’s research on the variety of analysis and methodologies towards the product market and exchange rates is very vital, since it is used in important decision marking like to buy and when to hold the commodity to the next peak period.
Intraday Swing strategy description:
Let us see in September 2019 on GBPUSD chart bullish several days major trend.
If we see on 30 minutes chart, intraday several hours bearish trend, we can wait for the price to pull back and then make a buy order like on the image :
This is an example of intraday swing trade when we trade against an intraday trend and follow a major several days trend.
There are so many ways to practice disciple in trading. The most important and the first stage of trading discipline is having a trading plan before engaging in any activity. Also, the trader must centralize all the responsibilities to himself/herself. You should be ready to face any situation and anything that might emerge against your trading activity. Always view these risks at all angles, especially from the extreme scenario. This will help you to be bold enough to face any negatives that might come on your way.
Intraday swing is just one of the strategies that traders use very often in trading. If you trade against a major trend, you need to be careful because the price needs to be on a fundamental level, and you need to see the reaction to that price before you enter into trade.