Intraday trading can be regarded as one of the most challenging and exciting forms of trading in share markets. This market allows traders to make profits in a single trading day. To book profits and gauge the performance of their scripts, traders use several tools such as patterns and analytical charts. They can also use different strategies to their advantage. The open high low strategy is one of the most popular trading strategies used by intraday traders. Let's find out more about it and how to execute it.
A buy signal is generated when the open and low values of an index or stock are equal. In the opposite direction, the sell signal is generated when both the open and high indexes or stocks have the same value. The intraday open high-low strategy must be used in large volumes and for small targets. To make profits as a trader you must be able to quickly enter and exit the market. It is difficult to manage this strategy because it has a high risk-reward relationship.
The opens at 9.30 a.m., so you need to be ready to trade as soon as the market opens. To execute the open high-low trading strategy, you must log in to your trading platform by 9.15 a.m. Here are the steps.
1. Log in to your trading account to ensure that you have enough balances to execute your trade.
2. Next, navigate through the app or desktop interface to create a watch list of scripts. Your watch-list should be available by 9.15 AM, i.e. 15 minutes before market opens
3. You must keep track of the pivot levels, highs, and lows for each day you are creating the watch-list. This information can be found on the brokerage platform.
4. Observe the movement of your scripts prices based on news about stocks or open interest for derivatives security. This should be done at least until 9.45 a.m.
5. You can enter the market at 9.45 a.m. Wait until the market opens and the price breaks the previous day's high. After it has broken, you can check to see if today’s opening price is equal to today’s low. If it is broken, you can trade long and keep your stop loss at the lowest price of the trading day.
6. If you want to trade short at 9.45 am, the intraday high low strategy can be used. If you wish to trade for short at 9.45 a.m., you can also execute the intraday open high low strategy. You should verify that the opening price of the current trading day equals the day's highest at the time. If it does, you should shorten, with your stop loss at the high price of the trading day.
7. After you have used the open high-low trading strategy to your advantage you can either exit the trade when the trading day ends or according to your stop loss.
You should close your position if your long trade stock reaches a new low or high in the trading day. The details of the new highs or lows can be found on your trading platform. You should also ensure that you exit the trade immediately after the stock reaches a low so that you can re-enter it if it triggers again.
Open high low is a strategy that many traders use regularly. If you're just starting out in trading, it is a good idea to seek advice before you begin. Angel One can help you become a trader expert.