BAJAJ BROKING
Anyone involved in the stock market, whether in trading or investing, knows that the stock market is a place where many investing and trading strategies are used. The opportunities for investing are many, but which is the right one? Well, there is no ‘right’ one and various exist. From long-term investors to day traders, different players implement a range of methods while trading and investing.
Additional Read: Share Market News
Day trading has become a popular way to trade as you can make gains in a single day. Like all investing, this may not be guaranteed, but day traders may be presented with opportunities to book daily profits by using techniques like open high open low.
Intraday trading, or day trading, is a dynamic method of trading in which traders execute strategies to open and close trades within a single trading day. They aim to book profits in the short period that a day trading session affords. Day traders tend to leverage market volatility and the open high open low strategy may aid them in potentially achieving this.
Open high open low is a very simple strategy wherein a trader looks at pre-market price levels. A signal to buy is generated when a stock has the same value as the open market price and is low. In this scenario, the trader will purchase the stock. On the other hand, a signal to sell the stock is generated when the open market stock price is the same and is high. These trades may occur with success if the trader times the markets positively.
Additional Read: Trading Account Guide
You may understand the open high open low strategy with the illustrated example below:
Assume that a particular stock opens at a price of ₹400 per share. In the early session (close to when the session opens for trading), the stock rises to ₹420 per share. If you are a day trader, you will likely see this as a bullish sign and you may take a long position and buy 100 shares at ₹420 per share. Furthermore, to mitigate your losses, you place an order of stop-loss at ₹400, and this would automatically close your position if the stock price decreases to this price. As the trading day passes, you closely track the price movements of the stock. Now, let’s say that the price of the stock climbs to ₹430 later in the day. You will close your position and book a profit of ₹1000. In such a case, your open high open low strategy has aided you in gaining returns.
The approach of this strategy is quite clear to understand and can be applied to individual stocks and indices. It helps in choosing appropriate sectors while trading and investing or accurate withdrawal in terms of market timing. Here are the key features of the open high open low strategy:
If you are a day trader and wish to follow the open high open low strategy, it is imperative you analyse long-term stock charts. This helps you determine stock market trends and prevents you from trading against current trends that may be based on past market movements.
As with any stock trading activity, the ratio of risk-reward is high when you adopt the open high open low strategy. This may occur as intraday traders are prone to set a stop-loss around the stock’s strike price.
For the open high open low strategy to be effective enough to determine which stocks to trade, and when, you can use a scrip scanner and put certain stocks on your special watchlist. The scanner aids you in deciding about a stock’s trade with accuracy regarding its trend.
When you are engaged in any kind of trading technique, consider that you tread with care, especially if you are trading in equity. For day traders who bank on making profits within a day, the open high open low strategy may prove to be lucrative but it comes with its share of risk.
You may consider certain factors before using this strategy such as opting for shares with a high trading volume or considering trades if the first candle of those trades is lower than the second candle. Furthermore, setting immediate support levels as the stop-loss levels may aid you. Once you have successfully applied this strategy, it is possible for you to exit your trades by the end of the trading day, or close your trades based on the stop-loss you have set. The open high open low strategy is known to be a practical way to potentially make profits from day trading activities.
Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing.
This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.
For All Disclaimers Click Here: https://bit.ly/3Tcsfuc
Share this article:
7th Pay Commission Leave Rules & Holidays in India
11 Dec, 2024 | 5 Min. read
Wipro Ltd
11 Dec, 2024 | 7 Min. read
Aditya Birla Group
11 Dec, 2024 | 10 Min. read
What is the Lock-in Period in IPO
11 Dec, 2024 | 6 Min. read
Textile Sector in India
11 Dec, 2024 | 11 Min. read
Step-by-Step Guide to Accessing Your Income Tax Assessment Order Online
11 Dec, 2024 | 3 Min. read
IPO vs FPO vs OFS: Key Differences in How Companies Raise Capital
11 Dec, 2024 | 8 Min. read
Gold Price in India - Gold Prices Edge Higher as Futures Hit $2,654.50
11 Dec, 2024 | 39 Min. read
Indian Overseas Bank Secures ₹1,359 Crore Income Tax Refund for AY 2015-16
11 Dec, 2024 | 2 Min. read
HG Infra Secures ₹899 Crore NH-227B Road Upgrade Project in UP
11 Dec, 2024 | 2 Min. read
NTPC Green Energy Secures 500 MW Solar Project with 250 MW ESS from SECI
11 Dec, 2024 | 2 Min. read
Awfis Space ₹583 Crore Block Deal Launches at ₹680 Floor Price
11 Dec, 2024 | 2 Min. read
RBI Launches ULI: Transforming Loan Access
August 27, 2024 | 4 Min. read
Textile Sector in India
September 20, 2024 | 5 Min. read
List of IPOs with DRHPs Filed
November 30, 2023 | 3 Min. read
Aditya Birla Group
September 28, 2023 | 10 Min. read
Bajaj Housing Finance Ltd IPO: Things Smart Investors Need to Know
September 05, 2024 | 4 Min. read
Budget Stock Ideas 2024-2025 | Stocks to Buy Today
July 24, 2024 | 4 Min. read
IPO Eligibility Criteria : Full Details
March 15, 2024 | 6 Min. read
What Is the Lock-In Period in IPOs?
October 18, 2023 | 6 Min. read
Godfrey Phillips Announces 2:1 Bonus Shares
September 16, 2024 | 7 Min. read
Jindal Group- A Comprehensive Analysis
September 27, 2024 | 7 Min. read
Level up your stock market experience: Download the Bajaj Broking App for effortless investing and trading