Buying and selling of stocks should only occur within one trading session on the same day. This trade is called an intraday trade. Stock trading is also known as day trading because it takes only one day to buy and sell stocks.
As the prices of shares keep increasing during intraday trading, the trader makes a profit from this share price movement.
In short, day trading is a source of income for people with stable hands. It’s all about making small profits from many trades throughout the day instead of making one big profit at a time.
Be realistic about the market and its risks. The trader should be able to turn this into a steady source of income.
So, to learn about intraday trading, many people read all the blogs and articles and take courses on the stock market to get the best of intraday trading and earn profits. Many fail in these as they don’t get all the required theoretical and practical knowledge from taking courses. But The Thought Tree provides the best Stock Market Course in Jaipur. You can join them for proper guidance.
Intraday Trading Tips and Strategies
1. Choosing Stocks Which Are Liquid
Traders should avoid small and mid-cap stocks where liquidity may not be sufficient. Otherwise, there is a high chance that the trader’s order will not be fulfilled, and the trader will be forced to accept delivery instead.
Liquidity is a very important criterion. Don’t forget it before selecting a specific inventory to trade.
Liquid stocks trade in large volumes, making it easy for intraday traders to buy and sell large volumes. Also, avoid investing your entire trading capital in a single stock.
Experts recommend spreading intraday positions across several symbols. Diversification helps balance your intraday trading strategy and minimize the risk of loss.
2. Freezing The Entry Price & The Exit Price
Many stock traders and investors are plagued by self-mistakes. In other words, the buyer regrets their decision shortly after the execution. They fall prey to misleading ideas.
This is when buyers start thinking quickly and questioning their game. Traders suddenly feel that their stock selection wasn’t as good as they thought when they entered a trading position.
To avoid such trading mistakes, the trader should follow this second free tip during the day trading. That is, the trader should set their entry and exit prices before entering a position. This allows traders to have an objective point of view.
Traders need to know how to strategically plan entries and exits without being influenced by emotion.
3. Always Set A Stop-Loss Level
Suppose there’s a trader who trades in XYZ Ltd at Rs. At 500 per share, the stock is expected to continue to rise today. That trader decides to invest Rs to buy 200 shares of XYZ Ltd. 1,00,000.
However, the stock instead of going up, the stock’s price goes down to Rs 400 per share. Within hours, that trader will suffer a loss of Rs. 80,000 (Rs. 400 x 200 shares). Investing in stocks can rise or fall down. The stock that traders buy and take a long position may go down on the trading day instead of going up.
Therefore, the trader should always decide how much loss he or she is willing to accept if the trade goes against his or her position. This helps minimize losses and acts as a safety measure.
Stop Loss helps manage risk and should be followed by all traders. We continue the same example; if we set the stop loss at Rs. 50, losses should be limited to Rs. Only 2,000 (Rs. 10 x 200 shares).
4. Choosing The Right Platform
Intraday traders often make multiple trades and make profits every day. Therefore, you should choose the right platform for quick decision-making, execution, and minimal brokerage fees.
Generally, intraday traders are required to pay brokerage fees to execute intraday trades. This includes his GST on Securities Transaction Tax (STT), SEBI regulated fees, transaction fees, stamp duty, and brokerage fees.
This can eat up a certain percentage of intraday profits.
5. Time Is Always Very Crucial
Profits from intraday trading are highly dependent on the time factor. One of the top intraday trading tips is within the first hour of the day’s trading, the trader should not take a position in the trading. The reason behind this is that during this period volatility tends to be higher in the market.
This leads to crowds and noise during this first hour of trading, which eventually causes significant price swings. Many professionals prefer daytime positions from 12 pm to 1 pm.
6. Researching Thoroughly About The Target Companies:
Once traders have identified a set of stocks to trade through professional intraday calls, they should be thoroughly researched. In different words, do your homework! Let’s begin with the aid of using expertise in how technical evaluation assists you in making higher buying and selling decisions.
The trader should find out when corporate events are scheduled. These include, but are not limited to, acquisitions, mergers, bonus issuances, stock splits, and dividend payments.
These events could prove to be just as important as technical-level updates. For example, momentum trading helps a trader see a strong trend in a particular direction and its ability to sustain itself.
Conclusion
In summary, to get the most out of intraday trading, you first need to learn how to take the right steps at the right time. The best way to master this skill is to pay attention to detail and try to understand the market sentiment in the morning, at noon, and just before the close.