Many intraday traders lose money because they are unable to identify the right trade opportunities. Besides, their emotions will take over in the live market, and they do many random trades that will erode their capital.
Usually, a good intraday trade opportunity can come in any form. It is highly essential to know all the trading types, to differentiate those trading types, identifying the right trading type in the live market on any particular day, and to maintain a balanced mind in all the situations is the key to become successful in intraday trading.
Below are the important trading types which can occur on any trading day:
1 - Trend continuation
When you get a trade opportunity in the direction of the trend with a good risk-reward setup, it can be recognized as Trend continuation or Trend following trading technique. Usually, these trade opportunities are safer but result in small to medium risk-reward trades.
2- Trend Reversal
When you get a trade opportunity in the opposite direction of the trend, it can be recognized as a Trend Reversal trading technique. Usually, these trade opportunities carry more risk but result in good risk-reward trades.
3- Breakout trading concept
If you look at the above image price consolidated within a range from 4-Dec to 12-Dec and on 13th Dec it breaks out from the range and gives a big move on the upside. Only the ‘Breakout’ trading technique gives positive results on this day, and any other trading technique will fail on this day.
4- False Breakout trading concept
False Breakout is a tricky candidate to analyze. Initially, it looks like a beautiful Breakout trade opportunity, and once you opt for a breakout trade, the price moves in the opposite direction. If you look at the above image, initially the price showed strength, and when we think it is ready to break on the upside, it faded that move and moved in the opposite direction.
Conclusion:
Every day cannot be traded with the same strategy. An intraday trader must have the clarity that an opportunity can come on any trading technique and he/she should be ready to opt for the right trade opportunity.
Market Profile concept gives more clarity on how to identify and differentiate these trading opportunities very early using “Open-Types” and “Day-Structure” concepts.
A detailed study of the market profile will help and provides an edge in intraday trading.
I hope this detailed explanation helps!