Day trading or intraday trading is the most popular approach to making a living in the stock market. Unlike investments, where you have to wait months or years to see a profit, you can profit in hours or even minutes with the help of some vital intraday trading tips.
As the name suggests, intraday trading allows you to buy and sell stocks (or assets) on the same day, i.e., Within the same trading session.
Trading is not intended to hold or maintain a position over the next day or weeks. The main goal of intraday trading is to make quick profits and close positions as soon as possible. The retention period for assets varies from minutes to hours.
Additionally, intraday trading is usually done on high beta or beta stocks. i.e., For stocks whose prices fluctuate significantly daily. If the price does not move throughout the day, there is no way for an intraday trader to profit from the stock. Therefore, an individual with no prior trading knowledge should learn some intraday trading tips.
Intraday trading tips for beginners in India
Below are some essential intraday trading tips for the Indian stock market to help investors make the right decision.
Pick two or three liquid stocks
In intraday trading, open positions are closed before the end of the trading session. For this reason, picking a couple of liquid, large-cap stocks is a good idea. Due to low trading volumes, investing in mid-sized or small businesses may require investors to hold shares in these.
Create a solid short course in advance and stick to it
The following points are essential elements of short-term development.
- Determine your entry level and target price in advance. It is common for people to change their minds after buying a stock. So you can sell even if the nominal price goes up. As a result, you may miss the opportunity to take advantage of significant price increases.
- Take profit as soon as you hit your target. Ignorant greed can lead to holding stocks longer than necessary, increasing the risk of falling prices. If you insist on holding, adjust your stop loss price to reflect your new expectations.
- A stop loss is a trigger designed to automatically sell a stock when the price falls below a set limit. For short-sold investors, a stop loss reduces losses if the price rises more than expected.
Change your strategy for intraday trading (rather than long-term investments)
It is common for day traders to buy stocks when they fail to hit their target price. Then wait for the price to recover to get your money back. It is not recommended as it may not be worth the investment as it is a stock purchased only for a short period.
Thoroughly research your wish list
Investors are encouraged to add 8-10 of his stocks to their wish list and investigate further. It is essential to know corporate events such as mergers, bonus dates, stock splits, dividend payments, and their technical level. Using the internet to identify resistance and support levels is also beneficial. Of course, you should study the basic concepts and terminology of the stock market.
Don’t move against the Market
Even seasoned professionals with sophisticated tools cannot predict market movements. All technical factors can point to a bull market. However, it may still decrease. These factors are indicative only and do not constitute a warranty. If the market behaves against expectations, it is crucial to exit positions to avoid significant losses. Intraday trading is highly leveraged, effectively allowing him to make significant profits daily. This tip is an essential intraday trading tip to follow by an individual.
Exiting a position at a disadvantage
In trades that result in a reversal of profit and price/earnings ratio (where the price is likely to show a reversal trend), taking profit and closing open positions is recommended. Additionally, if the position situation is unfavourable, it is recommended to exit immediately without waiting for the stop loss trigger to fire. It helps traders cut losses.
Intraday Time Analysis
Daily charts are most commonly used for intraday trading, representing price movements at intervals of one day. A common technique for intraday trading, these charts help show price movement from the opening bell to the close of a daily trading session. There are several ways in which you can use intraday trading charts. This is one of the best and most important intraday trading tips to follow.
Intraday trading is an exciting and rewarding undertaking for beginners but requires patience, dedication, and continuous learning. By educating yourself, planning your trades, applying technical analysis, practising risk management, starting small, choosing liquid stocks, setting realistic expectations, and staying disciplined, you can master this dynamic.
With these vital intraday trading tips, you can increase your chances of success in a competitive market. With time and experience, you can become a proficient day trader and reach your financial goals.