How to Make Profit in Intraday?
Intraday trading is a high-risk stock trading avenue that allows investors to benefit from the volatility in the stock markets. While you might have heard stories about people making a fortune in stock markets, there are many investors who have lost money too. Hence, it is important to use the right tools and create a strategy that can help you book profits in intraday trading.
While there is no secret formula for success in day trading, here are some pointers that can help you book an intraday profit by navigating the markets efficiently. Also, if you can open an intraday trading account with a broker who asks you to pay only when you profit, then the chances of booking profits increase.
What is Day Trading?
In day trading, you buy and sell stocks within the same trading day with an objective to book profits. To start day trading, you need an intraday trading account with a stockbroker that is linked to a Demat and bank account.
Also Read: How to do Intraday Trading?
As you have to compulsorily square off a trade within the same trading day, if you think that the price of a particular stock will rise, then you buy it cheap and try to sell when the price increases. On the other hand, if you think that the price will fall, then you short-sell the stock and buy it when the price falls.
To book an intraday profit, it is important to accurately assess the direction the price of a stock can take. Unless you want to create a day trading strategy on guesstimates, the best way to do this is by conducting extensive research.
There are various levels of research that you need to conduct to identify stocks that can help generate an intraday profit:
- Level 1: Spend some time analyzing sectors, industries, and stocks that have volatile prices, high trading volumes, and belong to fundamentally strong companies. This is an important aspect of stock selection for day trading. The price of stocks of fundamentally strong companies usually fluctuates within a specific range. This can help set stop loss and take profit levels with ease.
- Level 2: Keep your ear to the ground and stay informed about all important events concerning the company, industry/sector, and the overall economy. Booking an intraday profit requires you to assess the impact of any development and take a position in the market accordingly.
- Level 3: You will need some amount of expertise in reading and analyzing technical charts. While these provide information about the past performance of the stock, they can also offer insights and help make better trading decisions.
Create a Strategy
There are dozens of day trading strategies available online that can help you get started and even make profits. However, it is important to remember that none of these strategies can offer guaranteed profits. Hence, it is prudent to try a few and choose the one that best suits your profile. You can start with paper trade (trading without money) to assess the best strategy for you.
Intraday Profit Calculator
Many brokers offer an online intraday profit calculator to assess your profits after deducting brokerage and other charges. Many new-age brokers have started offering an intraday trading account with brokerage plans where you pay only when you profit and don’t charge brokerage for intraday trades where you book a loss. These plans can be beneficial in exiting a position when the stock price is not headed in the intended direction with minimal losses.
Before you choose a broker to open an intraday trading account, make sure that you go through the available brokerage plans and choose one that expects you to pay only when you profit. Also, go through the intraday profit calculator to assess the different charges that are levied on every trade to determine the selling price per stock that can generate profits.
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Most Accurate Intraday Trading Indicators
The stock market is volatile, especially if you are involved in intraday trading. However, it is the volatility of the stock market that makes it so lucrative for investors. Sudden peaks can result in significant profits, provided you follow intelligent and effective intraday trading strategies....Read More
When is Intraday Profit Credited?
From March 01, 2021, the Securities and Exchange Board of India (SEBI) released a new guideline for the credit of intraday trading profit.
Best Time Frame for Intraday Trading
Expert traders believe they should confine intraday trades to a few important hours of the day instead of buying and selling stocks throughout the day. Thus, if you are starting to trade intraday, you must identify the best time frame for intraday trading.
Frequently Asked Questions
The intraday profit calculator offered by many brokers on their website factors in the buy and sale price of a stock, brokerage, STT, stamp duty, GST, and various other charges to provide the exact profit you can make in a trade. If the broker is not providing any such calculator, then you can request him for a detailed list of all charges and create a calculator on any computer application like MS-Excel or Google Sheets yourself.
Usually, brokers offering a ‘zero brokerage on loss’ or ‘pay only when you profit’ plans take the average market price of the open position when you are squaring off the intraday trade. If you are losing money, then there will be no brokerage charged. While regulatory and statutory charges will apply, the ‘pay only when you profit’ plan ensures that your losses are minimized when the stock price does not move as anticipated by you.