Intraday Crypto Trading Strategy – How to Trade Daily Moves

Intraday is one of the most employed trading styles to capitalize on the daily fluctuations in the price action of financial assets. These fluctuations are small movements compared to those involved in weekly or monthly frameworks, and in the cryptocurrency context, volatility can trace the ground for substantial opportunities, being one of them the ability to identify short-term trends during day trading sessions.

Identifying clear trends demands spotting critical factors that influence daily price movements. Aspects like market manipulation on key levels or broader trends play a role in detecting the potential intraday trend effectively. Through the following sections, we will delve into these aspects, trying to present techniques for identifying trends in day trading.

What Is Intraday Trading?

Intraday trading or day trading is a speculative strategy that involves the ability to capitalize on quick price fluctuations in financial assets, in our case, cryptocurrencies, within a one-day session. It demands monitoring the market daily and developing high skills concerning risk and position management.

Day trading is the most extended method of addressing financial markets. Most experienced traders can make a living from this method despite the risks due to the potential opportunities the market offers during the day session as it permits the implementation of several techniques. However, making a living will require consistency in making profits and discipline to preserve them.

Intraday is a rapid way of potentially growing an equity balance but also losing it, where traders expose themself to sharp price fluctuations ridden by institutional activity, market makers, and economic news events. In this sense, we can make special mention of scalping strategies, which are a form of intraday trading but characterized by a riskier and faster approach.

While a day trader might look for hourly trades or the trend of the day, the scalper will look for a quick trade that lasts no more than a few minutes. The first can use time frames from 30 to 15 minutes, while the second from 5 to 1 minute.

It is pertinent to highlight that fundamental analysis does not play a relevant role for day traders as much as technical analysis. Concepts like price action, support and resistance, market manipulation, and market structures have more weight in the analysis of the asset price chart for the case of day trading.

Characteristics of Intraday Trading:

• Short-term: Intraday traders open and close positions within the same day session. Those positions could last for hours or minutes. It will depend on the volatility, strategy, and rapidness of price fluctuations. For example, traders employing news trading strategies will close their positions earlier than trend traders.
• High Frequency: Day traders can execute more than one trade during the day, employing different techniques. It will depend on their trading plans and experience. Scalping is a distinguished form of high-frequency trading.
• Leverage: Short-term price fluctuations are not as significant as long-term movements. This fact makes it hard for small balances to capitalize substantial profit, so leverage offers traders the option to amplify potential profits, including losses.
• Risk: Compared to swing trading or investor-type strategies, day trading involves substantial risks associated with factors like overleveraging and emotional control. Overcoming those factors requires a deep understanding of price dynamics as well as money management.

Identifying Intraday Trends

Identifying intraday trends can be as easy as drawing a trend line, but it can be challenging to execute the correct trading decision if traders ignore critical factors that shape market structures and price movements that ensure high-probability trade setups.

Then, which factors should traders consider?

• Range expansion movement during the opening sessions.
• Key levels traded in previous days and sessions.
• News releases.
• Manipulation tactics.
• False breakouts.
• Volume Analysis.

Those factors can be decisive when identifying an intraday trend and the potential opportunities over it. It is also relevant to remark that an intraday trend is a short-term movement influenced by broader trends.

In that sense, we can highlight two possible scenarios:

1. Continuation of the prevailing trend into an intraday trend.
2. A trend breakout of the prevailing trend by a short-term trend.

To understand better those scenarios, let's dive into the related concepts.

30 min timeframe

10 min timeframe

5min timeframe

Trend lines

Trend lines are a form of charting tool that helps traders discover trends by connecting higher lows in uptrends or lower highs in downtrends.

Higher low and lower high formations appear following a pullback in the trend and represent areas of upcoming dynamic support and resistance on the trend line.

The utility of trend lines relies on the potential trade continuation opportunities over those dynamic areas. Otherwise, a breakout of a trend line will suggest shifts in the price direction.

Support and Resistance

The analysis of support and resistance areas can offer insights into the key levels traded in the previous day or sessions that can act as the starting point for a short-term trend formation for the intraday price movement.

Manipulation tactics often take place over those key levels that professional traders (the big players) use to obtain the necessary liquidity to strengthen the intraday trend momentum.

Analyzing Time Frames

By employing different time frames, traders can identify a general trend, for example, in the 1-hour, 2-hour, and 4-hour, and then try to use that information to identify short-term trends in the 30-minute, 15-minute, and 5-minute for an intraday opportunity.

Generally, an asset trading below a general trend line will give space for a retracement into a short-term trend.

Indicators For Trend Identification

• Oscillators like the RSI can offer insight into the strength of an intraday trend by indicating oversold/overbought levels.
• Momentum indicators such as the MACD can anticipate the momentum of a short-term trend by employing crossover techniques.
• Moving averages, EMA or SMA, are excellent for smoothing, anticipating, and following a trending market by acting as trend lines for dynamic support and resistance areas.

Conclusion

Intraday trends can be a profitable option to address daily market price movements, although it demands employing advanced techniques that help traders overcome critical factors influencing crypto assets performance.

As we learned, identifying reliable trends can require drawing trend lines, spotting key levels based on support and resistance from the previous day or trading sessions, and even considering broader trends in higher time frames.

Platforms like Altrady feature advanced tools for charting analysis that can help traders of all levels identify trends effectively. Enroll in a free trial account with paper trading and practice detecting intraday trends.