Intraday trading, otherwise known as day trading is the buying and selling of securities within the same trading day. Intraday trading techniques are for daily traders who carry out multiple transactions in a single trade session. The securities traded here are mostly stocks and ETFs (Exchange Traded Fund) in opposition to Mutual Funds which need to be purchased from offline brokers or any other online methods.
On further exploration into intraday trading, it is interesting to note that the term ‘Intraday’ is usually used to refer to the highs and lows of a security. For example, when a stock reaches a new high as compared to other trading prices it is known as an “Intraday high”. In most cases, the intraday high also turns out to be the closing price of a stock. Intraday traders are mostly full-time traders who look to make profits on a daily basis.
They continuously monitor the prices of one or more stocks, on several screens of data in order to find the most beneficial conditions to enter or exit the trades. Latest developments do allow trading programs to do the job instead of browsing through different screens at one time.
If you plan on getting into the daily trading market, here are a few tips to help you build your intraday trading strategies:
1. Invest what you can afford to lose: Intraday trading is risky and can take an unexpected turn at any moment. The unexpected turn can either give you profits or losses.
2. Trade what you understand: You need to only trade what you understand. Trading something just because you see someone else trading is not really advisable as someone else’s profit can be your loss.
3. Focus on one set up: Concentrate on one setup at a time. Perfect the trade in your chosen set up, understand it and continue trading in the same for maximum profits before moving to the next one.
4. Take your own calls: Concentrate on what you think is right, rather than taking someone else’s opinion into account.
5. Do not over trade: If you are incurring a loss, you need to step back and analyse what’s going wrong instead of trading more in an attempt to overcome your losses.
Day trading refers to purchasing and selling the stocks on the same day. Day traders aim at making profits based on the short-term price movements by leverage large sums of capital. For beginners, day trading can be a little difficult to without having well-thought out plan. Here are a few strategies that retail traders can apply for day trading:
A day trader looks at two factors in a stock mainly which include volatility and liquidity. Volatility enables one to measure the price range. Liquidity helps a trader to enter and exit a particular stock at a safe as well as a good price.
A thumb rule for any kind of investment is not to put in all of your capital at once. A trader must therefore plan the trading budget and not exceed it. Invest in small amounts without being impulsive. Ensure that the risk-reward ratio is well calculated.
Trading on margins makes a trader vulnerable to price fluctuations in comparison to regular traders. The stop-loss feature in trading is designed to limit a trader’s loss. It can be a buy or a sell order which is triggered on an automatic basis after a stock reaches a particular price.
Many trader expect returns in triple digits within a short period of time without even making the required efforts. It is important for a trader to keep track of the individual strategy more than by checking the percentage gains or losses. Therefore, personal evaluation allows one to solve problems better.
Day trading is not a skill that can be achieved overnight. The bottom line is to not give up and continue to practice in a disciplined manner. Through consistent analysis and evaluation, there are all the possibilities of achieving the trading goals.
Indiabulls Securities, Angel Broking, Sharekhan Limited are some of the famous stock broking companies in India through which trading beginners can choose to invest. Trade the right stocks and target the best profits. These tips should help you in your Intraday trading ventures.
Investing in the stock markets is one of the most effective ways of boosting your wealth. One such way to invest in the stock market is intraday trading. The buying and selling of shares within a single day in termed as intraday trading. It is one of the best trading strategies that helps you reap the benefit of small fluctuations in the market. Intraday trading strategies help investors to gain benefit from both rising and falling market conditions as opposed to long term trading that can only benefit from a bull run. However, for those of you who are not familiar with intraday trading, making profits might seem difficult initially. Since the markets fluctuates in a fraction of seconds, a day trader needs to be quick in order to make profits. Here are few simple intraday stock tips that will help you to achieve more profits:-
- Trade liquid stocks: - Liquidity of a stock is the most important rule when it comes to selecting stocks for day trading. A stock with a high average trading volume can be termed as a liquid stock. Liquid stocks are apt for day trading as they can be bought and sold in ample quantities without causing much impact on the prices. With liquid shares, a day trader will not face any trouble finding buyers or sellers.
- Avoid unpredictable or chaotic stocks: - The stock with low trading volumes or stocks where some big news is soon expected have a tendency to trade in a very unpredictable manner. Generally, when a company announces some important news such as more profits, big orders, plant shutdowns etc. the stock are traded in a very chaotic manner. While day trading, it is better to avoid such chaotic stocks.
- Move with the trend: - For a day trader it is always advisable to move with the market. If the market is in an upward trend, try to find stocks that are expected to rise as instead of looking for stocks that may fall.
- Research thoroughly: - Most of the day traders fail to do ample research about the stocks they trade. Identify a sector such as the BSE Sensex or the NSE Nifty that appeal to you the most. Then create a list of stocks that appeals to your interests. It is also a great idea to go through the quarterly results announces by companies, this will help you understand how the market reacts to the results.