74.80 % of retail investors lose their capital when trading CFDs with this provider.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74.80 % of retail investors lose their capital when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

What are intraday trading and scalping?

Published: 14.06.2023

Some call them the pinnacle of trading expertise, others call them techniques bordering on gambling. We are talking about intraday trading and scalping - the fastest trading styles, taking advantage of excessive volatility in the markets. And it is these two styles that we will discuss in the final article of our mini-series on trading styles.

In trading, there are many trading strategies that have been developed and tested over time. In previous articles, we have explained what position trading is and what to think of as swing trading. In this article, you will learn about intraday trading and scalping, which tend to be considered the domain of exceptional traders.

What is intraday trading?

Intraday trading, also known as day trading, is a trading strategy in which traders open and close trading positions on the same day. This means that they do not hold them overnight. It is therefore a very active and fast form of trading that is based on trading smaller price movements.

In intraday trading, the trader mainly uses technical analysis. Fundamental analysis is of limited importance, the trader basically limits it to learning the dates of significant fundamental events. Once the news is published, the trader tries to take advantage of the volatility that usually arises as a result of the news. The actual outcome of the news is not so important for a day trader.

In intraday trading, there may be an illogical reaction in the market to a published fundamental report

For example, on 1 June 2023, a significant increase in oil stocks was reported. This should be a negative signal for oil and the price of oil should, therefore, fall. However, after the report, oil rose quickly as you can see in chart 1. If an intraday trader or scalper was stuck in the mindset that oil should fall because of this report, they could record a loss.

What intraday trading strategies seek to do is to free the trader somewhat mentally from the outcome of the fundamentals so that he or she can correctly "see" the movement that was rapidly unfolding in the market after the report and ride that volatility.

WTI crude oil on the 15-minute time frame

WTI crude oil on the 15-minute time frame

Intraday trading is further divided into:

Standard intraday trading

A trader holds transactions for several hours within one trading day. In intraday trading, the strategy tries to capture transactions that have a probable potential to move approximately 1/2 of the average daily range. However, this is not dogma. Some intraday traders try to capture transactions that will yield at least 10 pips and exit the position when that is reached. It can be said that one to a maximum of two trading signals will be generated on a single instrument within a trading day. However, there are also days when no signal is generated.


In this method of trading, the trader holds transactions for a few seconds or minutes. Also, the distances to profit are very small, sometimes up to 5 pips. It is typical for scalping strategies to have a negative risk/reward ratio, meaning that average gains tend to be lower than average losses. This means that in order to be profitable, a trader must achieve higher probability trades.

In scalping, multiple trading signals may occur per day. Thus, some traders will make around 10 or more trades in a single trading day. However, it must be remembered that scalping is not about impulsively clicking into the platform depending on every candle movement.

In general, when trading, it is only necessary to enter trades when a signal arises according to the trading plan. It is necessary to be absolutely precise about what the trading signal will look like, when to enter the transaction, where to put a stop loss and where to take profit, and at what times to trade.

All of this must be set up so that it is likely that within one day or a set trading time, the trade will make a profit. Unfortunately, in intraday trading and scalping in particular, this is very difficult to follow due to psychological contexts. More on this in the section on the disadvantages of day trading.

Which markets are suitable for intraday trading?

Markets that can be traded intraday must meet three basic criteria:

  1. Sufficient liquidity

    A liquid market is one in which there is sufficient supply and demand and it is actively traded. When there are enough traders willing to buy and sell at different prices, it means that you will have no major problem buying or selling at your desired price without a major slippage in order execution.

  2. Low spreads

    Due to the fact that the day trader, and especially the scalper, trade small volumes, they need to trade markets where spreads are low. In case you do not know, the spread is the price difference between the BID and ASK prices.

  3. Sufficient volatility

    A volatile market is a market that exhibits larger price movements. For intraday trading, it is important that the market is sufficiently volatile because if the price does not make any movements, it is difficult to generate profits. High volatility can be advantageous because it offers the opportunity for quick profits, but it also increases the risk of loss. High volatility often arises during important macroeconomic reports. The disadvantage is that after the immediate publication of news, these movements, while volatile, are also often difficult to predict.

When to trade?

That is an easy question to answer - simply when the market is volatile. Volatility occurs after the markets open. That is why day traders often trade between 09:00 - 11:00 London session or then between 15:30 - 17:00 (CET) US session. By the time bank traders go to lunch (i.e. between 12:00-13:00 in Europe and then between 18:00-19:00 in the US) the market is mostly dead and therefore not a good time for day trading.

Popular instruments for day trading that meet these criteria are:

  • stock indices such as NASDAQ or DAX
  • currency pairs such as EURUSD or GBPUSD

How to spot volatility on the chart?

This can be seen in the following chart, where the DAX is on a 1-minute chart between 9:00-11:00 (there is a time shift in the platform).

DAX index on the 1-minute chart

DAX index on the 1-minute chart

Our Purple Strike indicator is used in the chart. The blue color is for the long signal, red for the short signal. We can see that in this case, a long signal would send the trade into a profit of 1R within the first hour of trading. If the unit of risk R was equal to 1% of the account balance, then the profit for this session would be 1%.

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Advantages and disadvantages of intraday trading:


  1. Undisturbed sleep

    The main advantage of day trading is restful sleep (depending on the situation, of course). Transactions in intraday trading strategies are completed during the trading day, there is no risk of sudden drops during the night and the trader can start the new trading day with a calm mind.

  2. Short-term trades

    Intraday trading and scalping allow you to open trading positions for only a short period of time, which helps eliminate the risk of adverse events and market movements that occur when transactions are held for a longer period of time. For some traders, it is frustrating to see that their trade was in profit for two days and ended up in a loss.

  3. No fees for negative swaps

    Negative swaps are fees that are charged on certain instruments when you hold a trading position overnight. With intraday strategies, this risk is eliminated.

  4. High frequency of trading opportunities

    Scalping usually brings many trading opportunities every day.

  5. Flexibility and control

    Intraday trading offers traders control over their trades. Traders have the ability to react to current market conditions and events by quickly entering and exiting trades. An intraday trader or scalper can also adjust their strategy throughout the day based on new information and market conditions.

  6. Trading regardless of the market direction

    Intraday trading allows you to trade the markets regardless of their long-term direction. Thus, a trader can benefit from either a short-term rise in price or a short-term fall in the price of a given instrument.


  1. Extreme psychological demands

    Intraday trading and especially scalping are extremely psychologically demanding. Emotions such as fear, greed, and impatience arise very quickly. An emotional trance is created, which leads to impulsive reactions. The hormones that are generated within this emotional trance block the ability to think rationally, which can lead traders to stop following their trading plans. This process often occurs after generating several gains or several losses in a row. The result then tends to be mindless clicking into the platform, where the trader clicks, say, 50 or more trades per hour and keeps doing this until he deletes the entire account.

  2. A style unsuitable for beginner traders

    The process described above is related to brain biochemistry rather than overall psychology and cannot be regulated in any way at any given time. Once it is triggered, it can no longer be controlled. In this case, the only solution is to stop trading quickly. And that is the stumbling block. Because in a state of emotional trance, many traders fail to do this. This is why day trading is not a suitable strategy for beginner traders.

  3. It requires knowledge of advanced technical analysis

    Intraday trading requires a good knowledge of technical analysis and trading strategies. Training, education, and practice are essential to develop the necessary skills for successful day trading.

  4. High technological requirements

    Day trading requires access to fast internet connections and reliable trading platforms. If your internet drops out frequently or platforms freeze up due to outdated computer hardware, you need to resolve these issues first before considering day trading.

What time frames are used for intraday trading?

Intraday traders will likely rely on the H1 chart to identify major support and resistance from the previous day, and the 15-minute (or 5-minute) chart will then be used to identify the signal and confirm the entry.

The 1-minute to 15-minute charts will be available for scalping. Obviously, trading in volatile and liquid markets is required for these strategies.


Intraday trading is a style that uses small price movements within each trading day. The advantage is locking in profits during the trading session. In addition to a good knowledge of technical analysis, this style also requires quick reactions and full attention during the time the trader is actively trading. The main disadvantage is the high demand on the trader's psyche and therefore this style is not suitable for beginners.


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Key terms

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The offering price on the market for which the buying positions are executed and selling positions are closed. It is higher than BID price.
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Bidding price on the market for which the selling positions are executed and buying positions are closed. It is lower than ASK price and the chart displayed in MT4 is based on this price.
Day trading
Show answer
It is a strategy where a trader enters a trade on one day and exits the trade on the same day.
Fundamental analysis
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In fundamental analysis, the forex market is analyzed using macroeconomic data, social or political influences that can affect the demand for a given instrument.
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A long position (long speculation) is a trade that a trader enters when he expects the market to rise. Thus, the trader will buy the asset in question (BUY). The position will appreciate in value when the price of the instrument rises.
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Trading strategy type which uses minimal market moves with higher frequency of trades made in order to make a profit.

Sentiment analysis
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Market sentiment deals with the emotions and psychology of market participants. Market sentiment analysis shows whether traders have a desire to sell or buy.
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Short speculation is a trade where the trader anticipates a market decline. So the trader will sell the asset (SELL).
Technical analysis
Show answer
Technical analysis is a form of analysis where the trader examines the price. Charts are used for analysis to show the movement of the price. The assumption is that all the information is already contained in the price.
Show answer
Volatility indicates the volatility of the price of the asset. It shows how much and how often the price changes. High volatility increases risk and low volatility decreases risk.
74.80 % of retail investors lose their capital when trading CFDs with this provider.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74.80 % of retail investors lose their capital when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.