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Best Intraday Trading Strategy with Automatic Screener

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What is intraday trading?

It is one of the most common strategies followed worldwide by traders. Novice traders, most of the time begin their trading career with intraday trading. In intraday, traders have to square up their trades before closing off the market. The number of average trades taken in these techniques is 2-3 trades per day. If someone trades more than that it is called overtrading, it is not considered a good habit in trading. Due to the wide reach of internet access and reduction in brokerage cost, lots of people are trying their hand in trading. Traders require a good intraday trading strategy along with automatic screeners for good trades.

Many factors need to be considered in intraday trading such as Stop loss, Risk reward, money management, emotions, etc. Intraday trading works in all kinds of securities, forex, commodity, etc. There is a saying in the market that day trading is not everyone, in a certain way it’s true. For trading, you have to present in front of the screen till the completion or square off your trade. Everyone is not that privileged to have that much time to spend in front of the screen due to their office work, traveling, etc. So you can go for intraday if you have sufficient time, or you can go for swing trading.

The 3 step formulae for Intraday trading

Step 1: Money Management

The first and foremost thing that one should keep in mind before beginning their trading journey is money management. Let me explain this with an example, say if you have kept 100,000 rupees for investment purposes. For this 40-50% should be invested in safe assets like mutual funds,20-30% in long-term assets, 10-20% for swing trading, and not more than 10% for intraday trading. If possible, keep your trading account separate from your investment account. For trading, use discount brokers like Zerodha, Angel broking, etc. Risk management is another factor you should keep in your mind while trading. Try not to risk more than 2-3% of your trading account in a single trade. You can manage this with the help of proper stop loss and by avoiding over-trading. Proper risk management will help you to survive in the stock market for a longer duration.

Step 2: Intraday Strategies ( Entry, Exit, Stop Loss)

In intraday, even if you have done a thorough analysis, there is a possibility you will end up making a loss. That happens when you enter at an incorrect time. For example, the stock gave a good up move with 4-5 long candles, and you enter the trade hoping for more such movement. As you enter after a few minutes stock drops down and ends up hitting your stop loss, and it goes up again. Your analysis was correct and still made a loss because the stock did what we called consolidation after a long up move. Once you have entered the trade, always keep the stop loss on a trailing basis. In intraday, you have to take care of all these points before taking any trade.

Step 3: Trading psychology (Discipline, Emotions, Failure analysis)

There is a strong probability you will end up burning your hand if you lack discipline and emotions in trading. So is there any way we can avoid these blunders? the answer is yes. Traders should always try to follow a discipline sheet. In the discipline sheet, you can include stop loss, expected target, risk-reward, etc. This will help to overcome your emotions if the trade goes against your expectation. Failure analysis is another important part of trading psychology. You should always keep track of all your trades. It will help to analyze your past mistakes and to avoid such flaws in future trades.

Types Of Stock Screening Methods

 

Type 1: An intraday trading strategy for manual screening

In manual screening, traders make a watch list of their dearest stocks and trade only in those stocks. We agree that this is not a bad strategy. But with this strategy, you will miss another good stock. Those have much better trade opportunities, but they are out of your radar. There are limitations to manual screening. It will be too late until you find a trade opportunity. Sometimes the stocks in your watch list have no trading opportunity at all, while others may have. Manual screening suits best for a swing trade, but in intraday, it got many limitations. For more details on the intraday strategy, you can go check our “MMTC course by Tushar Ghone“.

Type 2: Intraday trading strategy with an automatic screener

In automatic screeners, results are based on certain criteria of selection. These criteria depend on the trader’s strategy, such as moving average crossover, 52 weeks high/low, volume breakout, etc. There are multiple options if you are looking for automatic screeners. You can code your scanner if you have skills, hire a developer, or many charting platforms such as MT4, chart-ink offer custom screeners without coding skills, or you can use scanners of predetermined set criteria. For more information on screeners check our “MMTC Mastering Candlestick +GAP+BTST by Tushar Ghone“. Here you will learn to make your scanners along with a detailed guide on candlestick patterns.

Overview of Intraday Trading Strategy

 

Strategy Based on Simple Moving average

You can run MMTC bullish scanners when the overall view of the market is bullish. When the view is down, run MMTC bearish scanners. When you run the bullish scanner, all the stock where 5SMA crossed 20SMA in an upward direction will appear. Bearish scanners will give a list of stocks where 5 SMA crossed 20 SMA in a downward direction. But there are a few points you need to consider while taking trades based on these scanners.

 

  • A chart time frame of 5 min
  • Entry- After crossover completion in charts
  • Stop Loss – One candle close below 20 SMA
  • Trailing Stop loss- One candle close below 5 SMA in red
  • Target- If there is any node or one candle below 5 SMA

Intraday Strategy execution (3 Step method)

Step 1: Check Nifty Direction (Up/Down)

Here while taking a trade, it is most important that you should be unbiased against any stocks. Say, If you feel like Reliance will go down, but the overall trend of Nifty is up, you should ignore short selling and look for long calls. To check market direction there are some settings you should apply to your charts.

 

Screener Selection Methods

  • Note– Keep chart time frame of 1 hour, apply 5 SMA(green color) 20 SMA(red color).
  • 1st Case -In the hourly chart, if Nifty candles above 5SMA, trade with Bullish Scanner.
  • 2nd Case -If Nifty Below 5SMA and Above 20SMA then, wait (don’t take any trade).
  • 3rd Case -When nifty 5 SMA below 20 SMA, trade with the bearish scanner.
  • 4th Case -When nifty below 5 SMA and above 20 SMA then wait (don’t take any trade).

Step 2: Select Bullish and Bearish Screeners based on market direction

 

  • Bullish scanner link

https://chartink.com/screener/future-scanners

  • Bearish Scanner Link

https://chartink.com/screener/bearish-scalper-5-mins-scan

Step 3: Criteria for the selection of stocks after screening

Once you are done with screening you will get a list of stocks. It doesn’t mean that you can pick any of these just because it appeared on screening. There are some strict rules you should remember while finalizing stocks for selection.

  • Rule 1: Do not select stocks at extreme levels ( high or low percentage).

The reason for this is, they have already shown enough momentum and there is a higher probability their trend will reverse. The best level is if it’s near 0.5 – 1 % then go for that trade.

 

  • Rule 2: Do not select stocks that are in congestion zones or near nodes

If you buy or sell near nodes of congestion zones, then there are many big buyers or sellers at that point who are unwilling to break that price level. It is better to take the trade when the price is far behind the nodes in congestion zones.

  • Rule 3: Avoid trading before 9:40 am and after 3:00 pm.

If you are a novice trader avoid trading using these scanners between these times.

  • Rule 4: Avoid taking more than one trade at a time.

Even if the scanner gives you a list of 5-10 stocks, avoid trading in all of them at the same time. Just concentrate on 1 stock that has the best trading opportunity and stick to it.

Examples (Backtesting)

Step 1- Check Nifty Trend ( It’s up, we will take bullish scanner)

 

Step 2: Run Bullish Scanner

 

Step 3:  Choose 1 stock

For more detailed information on intraday trading, one can go through different MMTC courses. There you can get detailed lectures on candlesticks, patterns, techniques on intraday trading, swing, position, etc. One such technical analysis course is “Money Making Trading Course” by Tushar Ghone. He is one of the most experienced professionals in the stock market and trading with experience over ten years. This course is for everyone, from beginners to experienced individuals at a nominal cost.

For more such information visit our blog page.

4 thoughts on “Best Intraday Trading Strategy with Automatic Screener”

  1. Avinash Khamkar

    very deep information and is very simple to understand.
    thanks for the detailed study material which will help us to do trading safe and better…

  2. Mahendrakumar Tawade

    thank you sir, for this valuable, study, you are very brave among greedy people, you now best teacher to me, explaining everything in so much depth and detailing. I feel very much secured and informed while dealing with stock now.

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