5 Essentials Intraday Trading Tips and Tricks
Intraday traders are no strangers to market volatility — in fact, they rely on it for profit. However, trading on a daily basis can be incredibly stressful, not to mention risky due to the short closing windows and fast market movements. If you’re on the cusp of your journey, it can be challenging or even dangerous to play the game of ‘buy low sell high’. It takes proper strategies and ample research to witness successful returns in intraday trading.
Below, we discuss 5 intraday trading tips and principles you can use to perform day trading in India. Keep in mind that these are simple recommendations for raising your chances at success — they aren’t intended to be instructions or rules. Undoubtedly the best tip of all is to gain as much knowledge as possible before you start intraday trading online.
Also Read: How to make Profit in Intraday Trading
In addition to that, here are some day trading online tips you can follow:
1. Do Your Homework
Intraday trading isn’t just about reading trading charts or using the right techniques. In order to succeed, you need to stay on top of market happenings that directly and indirectly impact the value of stocks. From the latest interest rate plans to economic predictions about specific companies, it’s important to stay informed about everything that can help you make better decisions in the buying and selling process.
2. Know When to Get Out
Things don’t necessarily progress according to plan when you’re intraday trading online. While taking risks is part of the job description, it’s unwise to move against the grain when the market situation diverges from your prediction. One of the golden rules of intraday trading is to plan each trade well in advance and stick to it. If things aren’t playing out as per expectations, the most rational course of action is to walk away.
Know More about Intraday Rules, Tips & Startegies.
3. Favour Liquid Stocks
This is one of the most relevant day trading online tips that you should bear in mind. Liquid stocks have a large volume, which means you can purchase or sell them in greater quantities without affecting the price too much. Because the essence of intraday trading is speed and precision, owning a high number of liquid stocks allows you to move in and out of trades more quickly. Small- and mid-cap stocks are generally less liquid than large-cap stocks and therefore recommended for day traders.
4. Decide a Stop-Loss Level
No matter how much you strategize your positions, there’s always the possibility of the share price falling after you’ve picked it. To minimize your losses, intraday trading online allows you to set a stop-loss level that serves as a safety net for how low your chosen stock can fall before the position is squared off. Once you finish researching the buy-sell recommendations, don’t forget to decide the price at which you will be prepared to automatically exit in case of losses.
5. Don’t Get Carried Away
As an investor, your margin for error is a lot bigger because your investments are long-term. However, for traders, the margin is significantly smaller — only one day. Therefore, staying calm, keeping your emotion in check, and not getting carried away by greed, fear, or preconceived notions is of the utmost importance. You should always think logically and be realistic about your profits. The market is designed in a way that tests your nerves, but as long as you’re armed with knowledge, research, and confidence, you’ll be fine.
Selecting the right stocks for intraday trading requires you to isolate the current market trend from the surrounding noise. The trader must capitalize on this trend. The best intraday stocks have certain common features - liquidity, correlation, and volatility. However, it is also essential to use the right entry and exit strategies.
Frequently Asked Questions
Some of the benefits of day trading in India include not dealing with overnight risks, benefiting from high returns, and enjoying low commission costs. Another factor that appeals to individual traders is that anybody with little capital can start intraday trading online.
For those wondering how to do intraday trading online, the first step is to open a Demat account followed by a trading account. The former allows you to hold your securities in one place, while the latter is necessary for executing transactions. The next steps are to immerse yourself in research, select the right stocks, and understand their ins and outs before you start trading.
Intraday trading, as the name implies, is the purchase and sale of stocks within the same day. Traders are required to start transacting when the markets open and stop once the market closes. This is done with the help of various online trading platforms. The stock exchange defines the trading hours.