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What is intraday trading?

Definition​

The term intraday is commonly used in finance to refer to securities that are traded during regular business hours, typically stocks and ETFs. It indicates the fluctuations of the asset's price throughout the day, including the highest and lowest points it reaches. Day traders, who engage in multiple trades within a single trading session, find intraday price movements especially important. They aim to settle all their positions before the market closes, making quick profits based on short-term market trends.

Understanding Intraday Trading​

Intraday refers to the highest and lowest prices of a security during a single trading session. If a security reaches a new intraday high, it means it has surpassed all previous prices during that day. Traders closely monitor intraday price movements through real-time charts to take advantage of short-term fluctuations.

Depending on their trading style, they may use different intraday charts, such as one-, five-, 15-, 30-, or 60-minute charts. Scalping is a high-speed trading strategy that aims to profit from small price movements, while other intraday strategies may hold positions for several hours. Although intraday traders may hold their positions longer, they still face high risks.

Example​

Throughout a trading day, the price of a stock is tracked and summarized at the end of the day. For instance, on April 2, 2019, Apple Inc. (AAPL) stocks opened at $191.09 and closed at $194.02. During the day, the stock price went as low as $191.05, which is called the intraday low, and peaked at $194.46, the intraday high.

Technical analysts and day traders who follow Apple would analyze the stock's price movements to identify patterns or uncover significant gaps, which are sudden price jumps without any trading in-between.

Gist​

  • The term "intraday" refers to securities that are traded during standard business hours, along with their corresponding price changes.
  • Day traders carefully monitor intraday price movements and time their trades to capitalize on short-term price fluctuations.
  • Traders use various intraday strategies such as scalping, range trading, and news-based trading.
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