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Choosing the Best Formula Intraday Trading Strategies

Formula intraday trading is a technique required by scalpers or day traders who use bigger contracts and larger trading capitals. The tool makes it possible to maximize their gaining. However, with bigger profits, scalping comes with bigger risks due to market volatility and the ability to male adverse and unpredictable moves.

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To make a profit, scalpers look for small but rapid price movements over a short timeframe. The only way to succeed is to ensure constantly nurturing trades. In other words, traders are supposed to keep close track of every position they open. Besides, it is also necessary to manage trades most proactively.

With so many risks involved, investors seek the best intraday trading formula that allows them to minimize those risks and ensure profit while trading larger contracts.

Intraday Trading Strategies Formulae

If you are a beginner, you may not know how to get a trading formula. There are many different techniques and tactics. The two most popular ones involve:

  • A strategy based on using the pivot point formula.
  • A strategy that relies on fraction theory.

None of the above-mentioned must be considered as the core or a stand-alone instrument that guarantees risk-free trading. Being successful on the financial market calls for much more than just following intraday trading strategies formulae. Additional qualities are needed as well:

  1. The right mindset can define the overall success in scalping. When you plan to become a day trader, you need to realize that some risks are impossible to predict. As 100% of all scalpers, you are definitely going to lose some cash. However, you need to be mentally prepared for losses. Otherwise, it may lead to uncontrolled trading, which is doomed to failure.
  2. If you are able to leave emotions aside and keep grounded, you have good chances to become a successful day trader. Greed and fear are the main feelings that prevent day traders from keeping it clear over the line. Always keep aware of where you enter the market and where you want to exit.

As a result, you will need a good trading plan. Stick to it whatever happens. Never trade on more money than you can afford to lose. While the trading plan will tell you where to stop or how to add another position, formula intraday trading strategies will make it possible to increase potential profits and minimize losses.

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Pivot Point Formula Intraday Strategy

The pivot point trading formula relies on the pivot point theory based on a mathematical approach. Pivot points form pivot levels that highlight asset prices traded the previous day. The key benefit here is that the strategy can meet the needs of beginners, as reading the support and resistance levels is quite simple. If security moves lower, you should expect it to stall near the support level and vice versa.

The pivot point-based intraday trading formula utilizes not only the previous closing price of security but also its current highs and lows.

The pivot point formula that is used for day trading is derived from the high, low, and the previous day's closing price. To calculate the support and resistance levels you need to do the following:

Resistance 1 = (H+L+C/3) x 2 - L

Resistance 2 = P + (H+L)

Support 1 = (H+L+C/3) x 2 -H

Support 2 = P - (H-L)

These formulae make it possible to keep an eye on price reversal that can take place just near the support and resistance levels. If there is a strong momentum, you can place either a buy or sell order somewhere around, as all levels are packed together pretty tightly.

Fraction Point Formula Intraday Strategy

This one looks quite similar to the previously discussed formula. It utilizes the idea of the fraction theory, which looks almost the same as calculating support and resistance levels to spot price reversals. However, the formula itself is slightly different. To make all necessary calculations, traders need to do the following:

  1. Sum all previous day highs and lows along with the closing asset’s price.
  2. Multiply the value with 0.67.
  3. Get a constant with the 2:3 ratio according to the pivot point theory.
  4. The final result is called Y.

Now, to calculate Resistance 1, you need to get the Y – Low value using the data from the previous day. Support 1 level is calculated as Y – previous day’s High. To identify the most favorable purchasing area, you need to use the Y – C formula while targeting the resistance level.

The Bottom Line

Using different formulas never guarantees success. Besides, intraday trading requires something more than just a good knowledge of technical skills. You need to have a clear trading plan, leave all emotions aside, and be ready to lose money. Never stop doing market research, try new technical instruments, experiment with strategies. Do not use a single formula as a stand-alone solution. Whatever tactics you choose, use them in conjunction with other instruments to ensure success.

This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.