Tips for Intraday Trading – Concept, Rules, Advanced Strategies, FAQs & moreLast Updated Date: Jul 01, 2022
In this article, we will discuss the tips for intraday trading and the rules regarding intraday trading. The article will cover the basics of intraday trading along with the tips and rules of day trading.
The word ‘day trader’ may seem so easy but it is actually the opposite. The life of a day trader is adventurous and tough.
He or she needs to fix their eyes on the computer screen just to take advantage of every single move in the price. However, this effort pays off really well for many as well.
If you can trade following the trading tips and rules for intraday trading, then you can churn out good profit.
What is Intraday Trading?
Intraday trading is a type of trading where the trader buys and sells the financial instrument within one single trading session.
In simple words, it is the process of buying and selling financial instruments within the same day.
The trader can buy and sell for once within the same day or multiple times.
For instance, if he buys a stock for Rs.150 at 10 am and the price of the stock is Rs. 152 at 1 pm, he sells it immediately.
Again the price falls to Rs.149 around 2 pm, he buys the stock, and before the market closes, he squares off his position.
Intraday trading is profitable if you can play it well.
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Who are Day Traders?
The day traders are those who do intraday trading. Well, the day traders invest their day in searching for stocks making small yet prominent moves in the market.
The day traders make money from small moves in the market. However, for taking advantage of the small moves of the prices, they need to invest a lump sum amount.
Intraday Trading Tips for Today & Tomorrow
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Tips for Intraday Trading
The day traders are one of the most knowledgeable stock market players. As they need to study and make a decision about stocks within a very short period.
It requires precision and expertise. So, here are some tips for Intraday Trading for the hard-working day traders to help them earn more from the market.
Freeze Entry & Exit Price – Tips for Intraday Trading
Often it has been noticed that due to buyer’s fallacy, traders and investors suffer. By freezing the price of entering and exiting the stock position can help you get rid of this issue.
Book profit if your target price has been achieved
You must not get greedy if your target price of the stock has been achieved. You must sell at that point, and then only you can minimize losses.
In intraday trading, leverage and margins are crucial for maximizing returns, but they can maximize losses as well.
The trick to minimize the losses is to book profit as and when the stock reached the target price.
Do not go against the market – Tips for Day Trading
In Intraday trading, you must go with the market flow. Do your analysis, make strategies, and stick to them until the market gives you a signal opposite to your analysis and strategies.
Once, you find that the market is not going in the direction which you thought, or not supporting the stock/financial instrument you have bought, immediately sell it.
Choice of the right brokerage house
For intraday trading, you need to choose a brokerage house that provides multiple services for day trading at reasonable charges. The brokerage charges should be minimum.
Choosing the right trading platform is necessary
Intraday trading involves volume trading and it requires a very speedy platform as well.
The trading platform must have multiple features for intraday trading. From live market prices to the technical indicators and charts.
Choice of right stocks – Tips for Intraday Trading
When you are day trading, do not invest in multiple stocks, or penny stocks, or illiquid stocks. Always choose the liquid and popular stocks. The stocks with high volume trading.
Do the time analysis
A stock can perform differently at different times. Check the charts for predicting the price movement in different periods.
You can check the 15 minutes charts to 2 minutes or 5 minutes charts as well. There are charts for an hour as well which you can follow.
Use stop-loss order – Tips for Intraday Traders
In intraday trading, the stop-loss order works like magic. It helps in minimizing the losses to a great extent. As the time is short, you cannot wait for the price to change drastically.
Thus you need to play with small moves. However, even a blink of an eye can change the market and if you do not take or square off positions, you can leap into losses.
So, using a stop-loss would help you square off the position or purchase the financial instrument when the target price set is reached.
Manage the risk
Intraday trading is risky. It has one of the highest risks in the stock market. The risk also pays off well if you can manage it properly.
You need to make the strategies well to make sure the risk is mitigating.
Always learn and explore the market
When you are day trading, you need to keep on learning. You can learn the new technologies in day trading, new strategies, learn about new potential stocks.
Maintain a trade journal – Tips for Intraday Trading
A day trader needs to keep track of all his or her trades. If you are into day trading, keep a trading journal. Enlist all the trades, open positions into it so that you do not miss any of them.
Focus on the strategy, not the money
If you think only about the money, neither you will be able to earn, not avoid losses. Keep your focus on the strategy. If the strategy fits in, you are bound to make a profit.
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Rules of Intraday Trading
Intraday trading has to be very planned and proper. So, there are certain rules for intraday trading that everyday traders must know –
Market timing is an important thing in intraday trading. Often expert intraday traders say that taking positions between 12 pm to 1 pm increases the chances of profit.
They also advise not to trade in the opening hours of the market.
Exiting the market at right Time
For intraday trading, you have to be very practical. When the market turns unfavorable, you must exit the market.
You must not wait for the market to turn in favor. It is because the timing is too short for the market to reverse.
Choose liquid stocks
One of the basic rules of intraday trading is choosing liquid stocks. The day traders must check the financials of the company and then only trade.
They must trade only two to three liquid stocks in a day.
Research and investment strategy
Another inevitable thing to keep in mind when doing day trading is research. Researching about the stock which you want to trade on a particular day is a necessity.
You need to complete your research, plan a strategy for intraday trading. It is also important to stick to the trading strategy you make unless it backfires.
Start with a small amount
The intraday market is for volume traders but initially you must trade using a small amount. Get the taste of the market and then trade volumes.
Always square off
In intraday trading, you must square off all your positions before the market closes. Do not get tempted by market conditions. If you are doing day trading, be a day trader.
Tips for Intraday Trading – Conclusion
Since each day trader is different, the tips and strategies they implement will be different.
However, intraday trading with proper strategy, plan, and practicality can help you earn a lot from the market.
You must follow the rules of day trading for minimizing the losses and churning out more profit.
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FAQs – Tips for Day Trading
Here are various FAQs related to Tips for Day Trading –
What is market timing?
Market timing in India is from 9.30 am to 3.30 pm. It is when you can trade in the stock market. The stock exchanges remain open throughout this period from Monday to Friday.
What is booking profit?
By booking profit, it means selling the shares/ financial instruments and generating revenue and earning profit.
What is a trade journal?
Trade journals are journals where you can enter all the trades you do. You can keep a track of all your trading positions.
What are trading strategies?
Trading strategies are the plans which you draw for trading the stocks. It involves different techniques of trading different stocks.
What are liquid stocks?
The liquid stocks are those where the trading is high. It means the stock is easily sellable and a huge number of buyers and sellers are trading the stock.
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