Intraday Trading also known as Day Trading is the one-day game in which you have to buy and sell or vice-versa on the same day before market close. Intraday trading is not easy, especially for inexperienced traders who find it difficult to select the right stocks or don't know where to enter into trade and exit timely.
Also Read: How to Do Intraday Trading: Best Stocks, Charts & Strategies
Entering and exiting at the right points in intraday trading is one of the most crucial decisions to make your day trading successful. Today in this article we will tell you how you can decide the entry and exit points in intraday trading.
What are the Entry and Exit Points in the Trading or Day Trading?
In long trade positions or buying, the entry point is the best possible level at which you should buy the stock so that there are fewer chances of hitting the stop loss and there is a possibility of movement in the stock to give you some profits.
Conversely, the exit points in the buying are the level at which the stock doesn't have the potential to move further or can turn back. For short-selling the exit point would be at the support levels where you book the profits or when your stop loss is triggered and that would be above your selling point.
In intraday trading identifying the right levels of entering and exiting from trade positions and making quick decisions for buying and selling is the key to making your trade successful. Hence let's find out such crucial points.
How to Identify Entry and Exit Points in Intraday Trading?
If you entered into the trade position at the right point and managed to book the profits at the right levels, then you can make money from day trading or such short-term trading practices. Hence, identifying the right exit and entry point is very important to make the intraday trading strategies successful.
Top 10 Best Entry and Exit Strategies for Day Trading:
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Use the Technical Indicators
An intraday trader can use various technical tools and indicator for finding entry and exit points on smaller time frame charts. A trader can use technical indicators like RSI, Moving Averages or MACD and other oscillators. Along with telling you the current trend, these indicators will also help you in identifying the right level of buying and selling with the maximum possibility of getting returns.
Also Read: How To Use Best Moving Averages for Intraday or Day Trading
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Buy the Trending Stocks
The stock-in trend will give you the opportunity to enter any level as the trend is likely to continue. But you need to make sure of the strength of the trend and you can take this opportunity in the early trading hours to get some room for booking the profits. The trend might continue for the next day, but you can exit intraday.
Also Read: How to Find Trending Stocks for Intraday Trading: Ten Rules
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Sell the Weak Stocks
On the selling side if you want to enter into short-selling you can choose to sell the stock weak on the day, which means when it’sin the downtrend. In early trading hours, or as soon as the market opens, you can sell the stock and owing to a downtrend when the price decreases further, then you can book the profits where no further movement is visible.
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Enter Above the Breakouts
The breakout and breakdowns are some of the best points to enter into the trade positions. When a stock is trading in range and turnaround from the resistance levels means the sellers are dominating at this point.
Also Read: What is Breakout & Breakdown How to Identify Breakout in Stocks
But when buyers are dominant and the stock breaks this resistance level and comes out from this trajectory, you can buy or go long at this point. Breakouts are one of best points to enter into long positions with potential of further upside.
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Short Below the Supports
Just like breakouts at the upper side, at the downside when stock breaks down the support levels, you can enter into a short-selling position at this point. The support levels work when the stock stops falling further due to buyers jumping into the market, but sometimes, sellers take the grip and override the downside movement breaking the support levels. This breakdown is a good point for selling the stock as it can move further.
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At the Trend Reversal Points
The trend reversal point is another useful point where you can enter or exit from your trade position in day trading. When a stock is moving in a single direction say uptrend but when the trend is reversed and the downtrend starts you can exit from your long position or book the profits or you can enter into short-selling positions.
Also Read: What are the Best and most Accurate Trend Reversal Indicators
Similarly, when a downfall in a stock ends and it goes through sideways momentum depending upon the steepness of fall, that time you can exit from your short position or enter into a long position. To identify the trend reversal you can use the candlestick chart formation and to confirm the trend reversal you can use the popular technical indicators that you can find or apply in TradingView.
Also Read: Which Candlestick Pattern is Most Reliable for Trend Reversal
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Book Profits at Resistance
I think we have already discussed this point but let me tell you how you can use the resistances in the stock prices for intraday trading. Usually, at the resistance levels the stock in an upward direction stops and comes down, so you can use this point to book the profits in your long positions.
Also Read: Support and Resistance: How to Find Support & Resistance
And when stocks move back from this resistance point you can also sell at this point or enter into short-selling positions. Most likely the stock will keep falling to its nearest support levels, where you can book profits or exit from short selling.
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Exit When SL Triggered
Either intraday trading or short-term trading, the best way to exit from your trade position is when your stop loss is triggered. Yes, when you trade with stop loss and it is triggered you should exit from your trade position.
Also Read: Stop Loss in Stock Market: How to Set Stop Loss Strategy & Take Profit
And you can now use this SL point as a new buying or selling point to enter into trade position. Stop losses are placed at crucial points like below the support in the long positions and above the resistance in short-selling trades.
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Exit When Target Achieved
While entering into a trade position you also set the targets where the stock can reach and stop the further movement. The target points can be decided by performing the technical analysis and using the technical indicators.
Also Read: Top 5 Best Technical Indicators for Intraday or Day Trading
And the best way to exit from your intraday trade position is when your target is achieved. And if there is the possibility to move further in stock, you can set multiple targets but keep booking the partial profits on achieving the targets.
Also Read: What is Profit Booking in Stock Market: Rules & Best Strategy
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Use the Open Interest Data
If you are trading in the F&O segment and if you are very understood with concept of open interest (OI), then it can help you predict in which direction the price action is going to take place. The IO data can be used to getting important picot points like support and resistance level on time frame.
Also Read: How to Use Open Interest for Intraday Trading or Trading
Incall options, open interest build-up at a certain level of the market index works as the resistance point. In the put option, the open interest build-up at the strike price of the market index or in the individual stock is a possible support point. For intraday trading, you can also use it for entering and exiting from your trade positions.
Other Strategies for Entry and Exit Points
Apart from these indicators and techniques, you can also use swing trading to choose the entry and exit points. Or use the risk-to-reward ratio to calculate the buying or selling levels and set your targets or exit points. This would be a calculative strategy but can be applied after using the latest values of price can give you these points.
Also Read: Best indicator for swing trading
Apart from that analysing the candlestick chart patterns can also give the idea of exit and entry points for intraday trading. You can use double top/bottom, head and shoulders, pennant or flag-like patterns to identify the possible trade points. Additionally, you can apply the indicators in these charts to confirm the same.
Also Read: Best Candlestick Patterns for Day Trading and Option Trading
Summing-up
The success of intraday trading is highly depends on the entry and exit points that gives enough room for the traders to book the profits. Choosing the wrong entry points could make your trade worthless or loss-making. Choosing the exit points is easy as if you gain the profits you have the option to book full or partial profits.
Also Read: What is the Best Indicator for Intraday Trading in TradingView
But when your trade position goes into the loss, you don't have any other choice but to exit from your trade position immediately to avoid further losses. Here you can get help from the market experts to find out the right trade points.
However, you can perform the technical analysis or use the indicators and breakouts or trend reversal points to into the trade positions. Intraday trading is a one-day game you have to trade on low margins, hence a reasonable gain will make your trade a profitable trading experience with the best entry and exit strategies for day trading.
Also Read: Top 10 Things You Should Know Before the Stock Market Opens
