Intraday trading refers to buying and selling stocks on the same day. Traders must close their positions before the market closes. The main goal of intraday trading is to take advantage of price changes on a given trading day and make rapid, short-term earnings. If you are looking to start intraday trading, you can follow the intraday tips and tricks discussed in this blog post. However, let’s first go through a quick overview of intraday trading.
What is Intraday Trading
Intraday trading involves buying and selling securities listed on a stock exchange on the same day. This type of trading has two main goals: obtaining capital gains on the securities purchased and reducing risk by holding investments for a longer time. However, price fluctuations might be substantial, which may increase the overall risk of an investor’s position during market downtrends.
Tips for Intraday Trading
Here are some tips for intraday trading.
Choose Liquid Stocks
Squaring open positions prior to the end of the trading session is the basic requirement of intraday trading. For this reason, choose two or three highly liquid large-cap stocks. Due to low trading volumes, investing in mid-size or small-cap stocks may require the investor to hold these stocks for a longer period.
Determine Entry and Exit Points
Set your price and entry levels. At times, you may sell even if there is a slight price increase. Hence, you can miss out on more profits if the price increases further. You can place a stop loss. It allows you to automatically sell the shares of a stock if the price drops below a certain threshold. A stop loss also decreases the loss for investors who have employed short selling in case the price increases above their expectations.
Research Stocks Thoroughly
Investors should trade eight to ten stocks after thoroughly researching them. It’s critical to understand the technical nuances of corporate events like dividend payments, stock splits, mergers, bonus deadlines, and more. It will be helpful if you do an open interest or OI analysis and also determine the resistance and support levels. Moreover, properly learned the fundamentals of the stock market.
Decide the entry and exit points
Intraday price fluctuations might make your stock choices doubtful. To enter a position in such a scenario, determine the entry and exit prices. This will ensure that you view things logically and have a clear idea of the prices at which you will be making deals.
You need to be able to plan your entrance and leave carefully without being emotional about your choices.
Book profits when you reach the target
Intraday traders should avoid being greedy. This is because the market may quickly change in a matter of minutes, particularly if it is extremely volatile. The huge leverage and margins that traders get are the key to effective intraday trading. Margin and leverage both contribute to increased earnings and even losses. However, you should not be greedy after achieving your target price. If the stock price has hit your target, don’t hold off on buying more until it does.
Don’t believe that the price will continue in the same direction. Trading decisions must be based on techniques and data, not on your intuition about a stock’s future performance. Adjust the stop-loss if you really think that the price will move in the same direction.
Do not challenge the market
Predicting the price movements in the market is very difficult. For instance, you can find that every indicator points to a bull market. So, normally, you can anticipate a price rise in your target stock. However, the stock price does not increase since the market sentiment changes.
Ultimately, you should avoid being too dependent on your analysis. The stock market is volatile; it is very natural. If the market does not support your analysis, sell and exit as soon as the price reaches your stop-loss level. Losses might increase if you keep believing that the market will behave as you had forecasted.
Conclusion
Intraday trading tips and tricks may be very helpful for traders. Yet, new traders should proceed with extreme care. They have to learn how day trading works and the complexities involved in it. To develop day trading strategies an individual should consider his trading style, risk tolerance, and market conditions. Moreover, it is essential to trade on a good platform that offers all the tools necessary for day trading. Opt for excellent platforms like Kotak Securities. It provides several charts for all time frames and indicators. It will help you make the right trades.
