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I dont do so much day trading anymore as its incredibly difficult to find profitable intraday trading techniques. For one thing, its very hard to compete against all the algorithmic machines and institutional traders. For another, I prefer to trade mechanically and its almost impossible to come up with a profitable intraday trading system .

Lastly, day trading can be extremely stressful and requires constant monitoring of the markets.

Thats not to say it cant be done. I know some people make a living day trading, and if you want to see how they do it, there are some excellent courses here .

But now lets get into my four favourite intraday trading techniques. These are the ones Ive had the most success with:

Intraday Trading Techniques

1 – Pivot levels

I hadnt heard of pivot levels before I got into trading but Im not sure theyre much of a secret anymore. Pivot levels go back to the days of the trading floor but theyre still used today by lots of intraday traders. Because so many day traders and locals look at them, these levels provide excellent levels of support and resistance. They have a simple calculation  which means that the levels constantly adapt to the market. Ive worked at two day trading firms and in both of them lots of traders would look at pivots.

The pivot is the most important level. If the market is above the pivot its a bullish sign, if its below the pivot its bearish. The other levels are usually very good levels to take profits. Take a look at this recent example in EURUSD. You can see that the market touches the key pivot levels regularly; pivot, R1, R2, S1 and S2 particularly.

One strategy? Buy or sell when the market pushes through the pivot with conviction then take half of your position off at R1 and the rest at R2.

2 – News trading

News trading isnt easy either, especially if youre a retail trader because the banks will likely have a quicker news feed. Again, it is possible but only if you stick to the big news releases that actually move markets. Plenty of news releases have no effect but the best news releases for traders are listed below:

– Non-farm payrolls (Average USD pip movement of 100-150 pips)

– Central bank announcements

– Retail sales (Average 80 pips)

– US Trade balance (Average 70 pips)

– US CPI (Average 70 pips)

The key with news trading is not to follow market sentiment; you need to work out what the market is expecting and if need be take a position against the crowd – if the probabilities are in your favor. For example, if the market is pricing in a 70% chance that the Fed will raise interest rates and you make it to be just a 25% chance, then going against the market offers a trade with great risk:reward.

News trading can be profitable but generally it requires quick thinking and a bit of preparation. Whatever it is, its always best to try it out for a while on a trading simulator.

Did you know?

Quantpedia has a huge database of quantitative trading strategies for stocks and futures.

3 – Scalping

Scalping requires skill but is one of the most popular intraday trading techniques. The scalping method is to take lots of trades with short holding times, hoping to capture one or two pips here and there, building them up as you go.

Increasingly, traders use algorithms to calculate minute inefficiencies in the market and scalp a couple of ticks here and there, particularly in the forex markets. It goes without saying that scalping requires extremely tight spreads. If you do get involved in scalping its also a good idea to sign up with a rebate company as you can get back some of your commissions that way. But I would certainly stay away from any intraday trading system that claims to scalp the markets as its probably not true.

4 – Unforeseen events

These days I rarely get involved with intraday trading techniques as they require too much time. However, the one time I will day trade is if I see an opportunity come up that is too good to miss. For example, maybe a stock has been sold too aggressively on a bad earnings number or maybe theres been a natural disaster. Usually, there are opportunities in these trades but they dont come around that often. Thats why I prefer to trade on a medium term basis and keep a little cash aside in the event of an intraday opportunity.

See my new post: 20 day trading strategies for beginners  for even more intraday trading ideas.

You may also like my list of the best trading courses for both beginners and expert traders.

Best broker for day traders?

If you have over $10,000 to lay down I recommend Interactive Brokers. otherwise check out SureTrader – minimum investment is $500, no day trading pattern rule and they were voted best penny stock broker on the market.

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