How to do Intraday Trading?

A trader can buy or sell shares in the stock market to achieve short term goals. The share price goes up or down as per the market. This market volatility can help traders to make a profit. Intraday trading means buying and selling of stocks on the same day itself, during the trading hours that are regulated by the exchange. In order to make extensive profits in a day, stocks are bought and sold in large numbers under intraday trading. One should know how to do intraday trading before getting into trading in the market.

Intraday Trading Tips

Though one can make great profits out of intraday trading, knowing the risks can help you decide where to invest judiciously. For instance, as an intraday trader, one needs to square off their position before 3.10-3:15 pm and not to mention intraday starts from 9:15 am and ends on 3:30 pm. This means you have to buy and sell intraday trading stocks within that stipulated time frame.

Let’s take a look at what are the things to be kept in mind when you are about to start your intraday trading.

Have a preset target

Novice traders may feel demotivated if unable to reap profits and in turn, miss out on important things necessary to succeed in day trading.

First and foremost, It is imperative to have a day trading plan to explore the numerous opportunities available in the Stock Market. Beginner traders need to use the best intraday tips to take advantage of these opportunities.

Set profit and stop-loss price targets before you start trading so as to curtail your loss and to prevent yourself from getting diverted.

Don’t take decisions in a haste Instead, think twice before investing and stick to your day trading plan; never aim to accumulate all the wealth in a single day.

Use stop-loss strategy

When the market is highly volatile, stop loss can help you in avoiding losses. With the help of this strategy, you can limit your loss up to a great extent. For example, if you expect the stock price to plunge below 100, you can fix 98 as the stop loss. This simply implies that your stock will be sold or bought automatically when the price reaches 98, reducing your loss. If in case, you have not used stop loss and the price plunges even further to 85, your loss will be high.

Pick Stocks that have high liquidity

Pick a stock that has high liquidity which will facilitate selling your stock at any point in time. Furthermore, make sure that you find buyers for your stock, otherwise, you might face loss. This is a very important point which is to be kept in mind when you pick a stock for intraday trading.

Avoid penny stocks trading

Penny stocks are not liquid and trade at very low prices and on top of that, fluctuations are also high which in turn makes it a high-risk stock. If you want to get a positive outcome, avoid trading in penny stocks.

There are several reasons why a trader might fall prey to these penny stocks; one of them is emotions. Don’t let your greediness take over your conscience as it can take a toll on you later. If you want to explore potential industries, you can try investing in public sector industries like metals and mining. One such example is Hindustan zinc share price which is prominent in the mining industry as it is India’s only and the world’s largest integrated producer of Zinc-Lead.

Do not Trade in the first hour

The fluctuations in the opening range of the first hour of intraday trading can help to identify the intraday trend. Moving with the market trend is recommended as it allows the potential for a greater profit if the trend continues.

Another thumb rule when it comes to intraday trading strategies is to fix entry price and target levels. Always withdraw if your desired profits are met. Proceed as per your plan and trade in a proper manner.

Choose the intraday market direction

You can choose an intraday market direction using the ‘value area’. The value area is the range where almost 70% of the previous day’s trade has happened. If the market opens less than or above this value area and remains in this area for two back to back half-hour periods, then the market has an 80% chance of filling the value area. This parameter helps in evaluating the market direction. Once you grasp the concept of value area and the 80% rule, trading can be very profitable.

If the market opens with a higher value than the value area, enter a short position closer to the top of the value area. Similarly, if the market opens lower than the value area, enter a long-term position closer to the bottom of the value area.

Keep yourself with stock market news

As the markets are known by their volatile nature, you should always be aware of what’s happening in the market or else you may face loss due to lack of knowledge. Make a habit of watching financial news or reading finance related blogs, whichever is convenient. For instance, if you check the latest news, you may notice that Vedanta share price, which was going down from the past few months, is now rising gradually.

On a closing note

To sum up, always remember that traders should use just 50% of their money while trading intraday, and the rest of the money has to be kept as a backup. It is highly advisable not to use the margin amount until your first profit experience. Intraday trading should not be misunderstood as getting rich overnight, instead, it is a process of earning profits every day for the rest of the month.