What is Intraday Trading; Pros and Cons

In simple terms, intraday (or day) trading is the buying and selling of financial assets within the same day/session. Here, positions are usually closed before the market ends to avoid overnight exposure.

This strategy can give you access to plenty of opportunities, no market rollovers and more. It can also be very risky, and may require constant monitoring of charts.

Let’s look at its advantages and limitations in more detail.

Benefits

1. Trades are safe from possible overnight gaps

This is a major advantage. Exiting all trades before the market closes protects day traders from uncertainties and risks that come with overnight holding.

You feel more in control and experience less slippage and “unforeseen” drawdowns.

2. You gain access to multiple trading setups

The frequent fluctuations that take place in a day can give huge profits. Various technical setups like breakouts, reversals or consolidation can produce quick turnovers for you (with well-executed systems).

3. Potential for high liquidity

Trading major currency pairs means buyers and sellers are always available. And as a result, it becomes easy to enter or exit trades.

With intraday trading, you experience fast execution and a more predictable market condition.

4. It is flexible

Flexible in the sense that you can choose when and how you want to speculate during market hours. Adopting this trading technique gives you the autonomy to set your own trading hours or system.

Disadvantages

1. It can be highly risky

Just like it can give you more returns due to constant price swings, it can equally cause you huge losses if the market goes against you. This is why a trading plan/risk control is paramount.

2. Time-consuming

Day trading requires a lot of dedication and commitment for success. You need to carry out thorough research/analysis, monitor & examine price charts (movement), etc. It demands time and effort. And some individuals may find the process draining.

3. It can be emotionally strenuous

For beginners, intraday speculation can be overwhelming. Feelings like fear, greed and the urge to revenge trade can trigger impulsive/poor decisions. And the consequence is often losses, frustration or anxiety.

FAQs

Is Intraday trading profitable?
Yes, it can yield impressive returns. To achieve consistent profits, you need disciplined risk management and extensive knowledge of the (FX) market.

Can beginners utilise day trading strategy?
Yes, this strategy is also suitable for amateur traders. But first practice with a demo account or free trial.

What timeframe is best for intraday speculation?
There is no best or special timeframe for day trading. Your choice here depends on your strategy. Note that this technique relies on shorter time frames (like 5, 15 mins, or 1 hr charts).

When is the right time to implement intraday trading in forex?
Day trading can be implemented whenever there is liquidity, Some traders agree that the overlap between London – New York trading sessions is most ideal. Because in this period, there is high volatility.

Do prop firms allow day trading?
Yes, many proprietary companies support this system.