Intraday trading refers to selling and buying stocks on the same day before the market closes. If you miss doing so, then your broker may square off your position, or convert it into a delivery trade.
As intraday trading is the buying and selling of stocks on the same day. It is done using online trading platforms. Let assume someone is buying stock for a firm, they have to specifically mention ‘Intraday’ in the portal of the platform used. This allows the user to buy and sell the same number of stocks of the same firm on the same day before the market closes. The purpose is to earn profits through the movement of market indices. It is also called Day Trading.
The stock market makes you great returns if you are a long-term investor. Yet, even in the short term, they can assist you to earn profits. Assume a stock opens a trade at Rs 550 in the morning. Soon, it climbs to Rs. 600 within an hour or two. If you had bought 1,000 stocks in the morning and sold at Rs 600, you would have made a cool profit of Rs 60,000. It’s all within a few hours. This is called intraday trading.
Deciding When to Sell
There are different ways to exit a winning position, which are by trailing stops and profit targets. Profit targets are the most obvious exit method while making a profit at a pre-determined level. Some common price target strategies are:
|
Sr. No. |
Strategy |
Description |
| 1. | Scalping | This is one of the well-known strategies. Scalping covers selling almost immediately after a trade becomes profitable. |
| 2. | Fading | It involves shorting stocks after rapid moves upward. Fading is completely dependent on the assumption that they are overbought, initially, buyers are ready to begin taking profits, and existing buyers may be scared out. Although it is risky, this strategy can be extremely rewarding. |
| 3. | Daily Pivots | It involves profiting from a stock’s daily volatility. It is done by attempting to purchase at the low of the day and sell at the high of the day. And, the price target is simply at the next sign of a reversal. |
| 4. | Momentum | This strategy usually includes trading on news findings or releases strong trending moves supported by high volume. One of the types of momentum traders will purchase on news releases and ride a trend till it shows signs of reversal. And the other type will fade the price surge. And here, the price target is when volume begins to decrease. |
Intraday Trading Tips for Beginners
Know more about Intraday Trading Tips – Intraday Trading for Beginners is riskier than the regular stock market. It is important, especially Intraday Trading for Beginners, to know the basics of trading to avoid losses. Individuals are urged to invest only the amount they can afford to lose without facing financial difficulties.
Choosing the right stocks might seem like a challenge to Intraday Trading for Beginners. However, it should not stop you from exploring wealth creation opportunities in the stock market. Here are some best Intraday Trading Tips for Beginners which will simplify the process. Some Intraday Trading for Beginners discussed below that help investors in making the right decision. If you follow our best Intraday Trading Tips for Beginners mentioned below will help you to lose less and gain big in the stock market.
Tip 1: Have a Proper Strategy
Intraday trading is done to earn quick profits based on the price movements. Trade-in stocks only after knowing how much amount you can use for trading purposes and how much you can afford to lose. You don’t have to panic and take all decisions after proper research. It is one of the most important intraday trading tips for beginners to earn high returns.
Tip 2: Buy Some Shares with High Trading Liquidity
An intraday trader buying stocks to sell them for profit on the same day. An individual never actually buys a stock or takes delivery. When anyone buys a stock, they create an ‘open position’. In other words, they need to sell the stock to close this, else they will have to pay for the stock and then sell it at a later date.
Therefore, intraday trader volumes play an important role in the trader’s ability to square open positions.
Most intraday traders concentrate on the stock price since they want to buy low and sell high. Sometimes, they ignore the trading volume of the stock. Trading volumes are the total number of shares of a firm that they traded in a day.
If the trading volumes are low, the trader might have to purchase the stocks making his liquidity down. So, you should ensure that you purchase some shares with high trading volumes to maintain liquidity. One of the most significant intraday trading tips for beginners is to use the stop loss trigger to lessen the potential loss on your position.
Tip 3: Avoid Sudden Decisions
One of the important elements of Intraday Trading for Beginners should know the price you want to enter and exit. Usually, after purchasing a stock, market volatility can force you to make sudden decisions limiting your profits or even causing a loss. So, it is necessary to have a rough idea about the optimum buying and target prices before making the trade. There are several ways to determine these values:-
- Buying Price – An intraday trader must purchase when the stock price drops, reaches a horizontal zone, and commences its increase.
- Target Price – This should be a little lower than the expected price of the stock in a day.
Always remember, there are no rules of fixed formulae for determining these prices. You need to try various methods and get the one that works for you. You will earn better with time and experience. Stock returns can be huge. Earning smaller profits by adhering to these best intraday trading tips for beginners can be satisfactory. Intraday trading gives higher leverage, which effectively gives decent returns in one day. Intraday Trading Tips will help investors to make the right decision.
Tip 4: Risk management
Successful intraday traders are those who can manage risks properly while booking profits. Use techniques like stop-loss to make sure that you keep your losses in check.
Always keep it in your mind that intraday traders are required to learn to accept the fact that the markets performed contrary to their expectations and close their open position without taking heavy losses. This is maybe one of the most important intraday trading tips for beginners to keep in mind before you start trading. This is one of the intraday trading tips that will help investors to manage their risks properly.
Tip 5: Focus on Few Stocks
Don’t try to trade in too many stocks at a time. As you must check the technical charts of every stock to understand their price movements. Keep yourself updated with market trends, strategies, etc. Develop a habit to read about Intraday Trading Tips. Constant reading and being updated are important to become a smart and successful trader. Consider this as one of the intraday trading tips that will help you to become a successful intraday trader.
Tip 6: Educate Yourself
Intraday Trading for Beginners requires analyzing the external factors and their influence on the stock markets. Follow some stock analysts online and try to know how they analyze events that impact stocks. With time, expand your own way of being able to choose the right stocks based on market trends. It is also one of the intraday trading tips that helps you to earn a lot of profit.
Tip 7: Don’t Be Too Greedy or Too Afraid
Two types of traders who lose money in the stock markets are those who are too greedy or too afraid. Intraday Trading for Beginners is all about risks. As you plan to make profits during one trading session, you will have to take risks. Also, when the profit per share will usually be marginal, you will need to invest in several shares to book a reasonable profit.
This would mean a higher risk of exposure. If you are afraid of taking risks in the stock market, then intraday trading might be inefficient for you. So this is also one of the intraday trading tips that will save you to get much less.
Tip 8: Keep Emotions Away
It is one of the necessary intraday trading tips for beginners, which is applied for all kinds of trading. Keep emotions at bay. This is one of the trickiest parts of intraday trading. While market trends usually decide the direction in which the stock price will move, getting too carried away can lead you to make an emotion-driven decision that can be dangerous. Concentrate on facts and data and make informed decisions. This is one of the intraday trading tips that will help you to make the right decision.
Tip 9: Don’t Trade Simply Based On Rumors
Ensure that you double-check every information that you get on a social media platform with a trusted source. Take decisions only after you are sure about the authenticity of the information. Consider this as one of the best intraday trading tips for beginners that will save you from making wrong decisions.
Tip 10: Think Twice Before You Move Against the Market
Intraday Trading for Beginners is required to close all open positions before the end of the trading session. Therefore, investing in the market can increase your losses. Also if you have enough data to predict a surge, invest carefully. Consider this as one of the intraday trading tips that will help you get much profit.
Things to know about Intraday Trading
Few points to know about intraday trading.
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Trading Strategy
Intraday trading or day trading is a strategy where you purchase and sell your stock holding on the same trading day. Traders can take advantage of the price fluctuations that take place during market hours. In case the trader expects the price to increase during the day, he or she would first purchase a lot of securities and then sell some time during the day. The reverse, called short-selling, can also happen. To take benefit of a falling market, traders would short-sell. This is when they borrow and sell shares in the market. Once the price drops as required, the traders buy shares at the lower price and then return them to the lender. . Intraday Trading Tips will help investors in making the right decision.
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High Risks
Since day traders can take advantage of the volatility, they are exposed to high risks. This is risker than the risks taken by a long-term stock investor. As a result, day traders are usually speculators, who are ready to take high risks. They usually conduct high-value by using margin trading. But, intraday traders can also earn an extraordinary amount of profits
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Stock Price Impact
By doing so, they usually affect the stock’s price trend. Suppose, the stock is trading at Rs 200-202 range. Intraday or day traders decide to bet on the stock and 2,000 shares each. So there is an unexpected rise in demand for the share. This causes prices to go up marginally. As soon as it hits a specific level, traders sell their stocks. This, in turn, generates prices to fall.
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How to day-trade
First of all, the purpose is to pick stocks that have a high volume of trade. This means they are highly liquid. This could hold penny stocks – shares of small-scale companies with prices as low as Rs 20. Pick a maximum of two or three stocks at a time. It would become hard to monitor more shares. Decide the value at which you want to purchase and sell – your entry and target prices. It is very important, to make sure that you have a stop-loss order to act as a safety net. This will help reduce your risks. Once you have placed your order, monitor closely and exit when the value has hit your target or stop-loss levels.
Benefits of Intraday Trading for Beginners
Intraday Trading for Beginners has the following benefits:
| Lower risk | As securities are bought in intraday trading, the risk of acquiring substantial losses is reduced. But, in the state of standard trading wherein the principal is locked in for a considerable duration, fluctuations in price can be very important, making an investor worse off in case of stock market downturns. Intrading tips will help you to reduce the risk. |
| Lower commission charges | Stockbrokers charge very low fees while transacting in intraday trading stocks, as delivery charges of transferring security in the name of an investor are forgiven. Stock transaction tax, services tax, trade fees, and much more are all-inclusive in brokerage fees, and such deductions decrease the income of an investor. |
| Higher profits | Intraday trading is known to generate extensive wealth creation for investors when we apply accurate investment strategies. Capital appreciation in a growing stock market can be achieved easily. In case of unfavorable market conditions, intraday share traders use the method of short selling to gain profits. Go through the intraday trading tips that will help you to get higher profits. If you follow our best Intraday Trading Tips for Beginners that will help you to lose less and gain big in the stock market. |
| Liquidity | Day trading is that total financial resources invested can be immediately recovered at any time. It is not blocked through an asset-buying transaction. This protects the liquidity requirements of an investor to fit any personal needs. If you follow our best Intraday Trading Tips for Beginners that will help you to lose less and gain big in the stock market. |
| Capital gains through market fluctuations | Investors can earn profit through intraday trading which is completely dependent on the investment strategy adopted in such situations. Capital appreciation in a bullish market can be achieved by the buying and sale of securities listed on a stock exchange. If the stock market is a downturn, then the profits can be generated through short-selling financial instruments. |
| Associated Risks | An investor requires having huge knowledge about the intricate workings of the stock market for earning sufficient profits. It may seem unusual for a beginner investor looking to generate capital gains. It is required to pick securities of appropriate firms in such cases, for which precise analysis of financial records is required to be done.
Market volatility plays a vital role when it comes to intraday trading stocks. In case of unexpected market variations, investors can face losses. Technical analysis of markets is based on past volatility, and might not be 100% correct in all instances. |
Best Intraday Trading Tips for Beginners – FAQs
Q1. What is the difference between delivery and intraday trading?
Ans. The primary difference between intraday trading and delivery trading is the time period of the delivery of the shares. If the trading is done on the same day then it is called Intraday and if the trading is done over a period in time, it is called delivery trading.
Q2. What is stop loss and why stop loss is important in intraday trading?
Ans. Stop-loss is a trigger that is activated when the minimum price of a stock gets hit. It is important as it can serve to minimize financial losses.
Q3. How to find stocks for intraday trading?
Ans. Always pick stocks with the best Liquidity as it is the major criteria for picking any stock in intraday trading.
