Last Updated on 01/01/2021 by Deepak Singla
To get profit, one needs to invest in the long-term duration. The most famous investors in the world are known to remark about holding stocks for many years. One can get good profits if intraday trading goes the right way.
Many efforts are required to learn about the market. You have to gain experience from the market with the help of the best online stock market investment in India. They help to predict the momentum of the stock market. Intraday trading got famous in India in 2001.
Meaning of intraday trading
Intraday trading is the buying and selling of the shares on the same day before the closure of the market. In Intraday trading, you can get all the possible positions at the time of the market hours. The best aspect of intraday trade is that the trader does not take the share’s delivery. A typical order is in T+2 days in India. In the intraday trader, the positions are closed on the same day. The share ownership doesn’t change during intraday trades.
Fundamentals of intraday trading
The main criteria for intraday trading and long duration investing are similar. Both require a Demat and a trading account. You have to make sure that your broker supports fast executions. It creates a significant impact in the intraday trades. One more aspect to take into consideration while opting for the brokerage aspect is the technical support level they give as intraday trading needs regular monitoring and extensive research with best online stock market investment in India.
Another vital thing to consider before you begin trading is the fees charged by the brokerage. Multiple trades take place during the day-time. So, high transaction fees can hurt the total returns.
Let us take a look about how to do intraday trading in India:
Here are the best intraday trading tips to invest your money in stocks and grow your wealth.
Opt for liquid stocks:
Day trading needs you to square off the position before the day’s end. In case you purchase the inventory that doesn’t have ample liquidity, you may not sell it when you wish to leave. The primary aspect of day trading is to deal with liquid stocks.
There will be no restriction on the volume of trading if you deal in liquid stocks. Liquid stocks have several buyers and sellers, which can cause volatility in the price of the capital, and the day traders require volatility to produce profits.
Do ample research before you begin:
The profit potential is high in day trading. The chances for losses are also high. You have to do adequate research and focus on the shares you wish to trade. Choose stocks from a segment in which you have complete knowledge. When you make the shares final, you have to monitor their price for a few days. You also have to take care of the metrics like volume and liquidity before you start the trade.
Stocks that move with the market are better:
Different reasons can initiate movements in prices. Some stocks exhibit the evolution of the broader indices. If Nifty shows a rise, the shares will rise. If it declines, the stocks will nosedive. Many of the stocks do not possess a set pattern. So, a person needs to be alert when you deal with them.
Identify the right price:
One has to ascertain the right amount for entry and the right price to exit. The trades make use of various strategies by making use of support and resistance levels to get to the correct entry and exit prices. The stock trading services for the share market in India is all about profit-making. There are different strategies adopted by individuals. You have to stick to the plan.
Setting up a stop-loss:
The brokerages facilitate adequate leverage for Best intraday trading. It can enhance the profit potential and also the loss potential. The loss incurred at the time of day trading can be significant. It makes setting a stop loss pivotal. A stop-loss limit can cut your position when the share price gets beyond a specific level.
Always go with the trend:
Choose a broader market trend in day trading. It would be an excellent idea when the market is bullish. If we take the other aspect where the market is bearish, you may opt to wait for the stocks to bottom before you enter.
Various brokerage companies give the margins to the intraday traders, and these might be of some risk for the trader. In case the decision is not right, they may have no money to pay. In intraday trading, make sure you decide on the capital allocation for trading purposes. It would be best if you did trading with a definite risk to return ratio.
Read books on the intraday market
The best thing would be to follow the market carefully. Get into the daily habit of reading books related to the intraday market. You need to adhere to the steps with the utmost discipline. You need to follow the best intraday trading strategy. To be disciplined is not a skill, but it is a habit for the traders to make the right decisions.
The most pivotal rule for choosing the stock for intraday is to avoid volatile stocks. There are higher chances of the trigger of stop-loss when you opt for the volatile stocks.
Moving with the market trend provides excellent results with Best intraday trading. The quality in research is a great rule that every trader has to adhere to strictly. Always choose a stock for intraday trading that is not volatile.
Choose companies with transparency
You need to do intraday trading only in those firms where there is ample information accessible to the public. The companies you invest should be transparent, and this will give you a great chance to move into your stock selection list.
You need to opt for companies that can keep their promise and have a very stable management system. The most important aspect is that you need to pay close attention to the management quality when you choose the day trading for stocks.
Focus on the stocks that are in the future as the stock analyst analyses these stocks. So, you can get more details on such types of stocks.
Information about charting patterns
You need to know the various charting patterns as an intraday trader. You have to find the relevant and vital intraday levels from the chart. You have to do an everyday analysis and find out the various stocks with precise patterns of charting.
You need to take into consideration the most liquid stock for day trading. Always measure the capital by the following formula:
Liquidity = Average everyday volume / Market capitalization
In case the ratio of liquidity is 10 percent, you may opt for the stock for day trading.
Check the sensitivity of price to news flows
The day traders depend on two aspects. One is the varied charting pattern, and the other is the sensitivity to the news flows. You may utilize this strategy of purchasing based on the news. This strategy works wonders when the stocks are highly sensitive to news.
You need to your homework daily and opt for the stock according to your strategy. Do the trading on a random basis. Intraday trading is all about securing your capital. One needs to have discipline in stock trading. Never make any decisions based on your emotions.
Check the ownership of the stock patterns
You have to do a detailed analysis of the stock ownership patterns. You can access it from the stock market research website. The stocks can become volatile if there is no vast ownership of shares. Always prefer those stocks which are liquid and have a full ownership pattern. It will lessen your risk a great deal.
The firms which have powerful brands are most suitable for intraday trading. It makes sure that the trends can be there for a more extended period.
It is a vital tactic that every trader needs to follow. Traders make use of technical analysis for the best quality research. The traders can find out various charting patterns of the stocks and opt for the appropriate stock.
Choosing the stocks
Choose the stocks that are associated with main indexes and significant sectors. You will get an idea when the areas move in an upward direction; the stock prices increase.
If one wants to be successful in day trading, he or she has to be highly disciplined, patient, and consistent. You can gain profits in intraday trades if you stick to some specific rules. Some people often get swayed away, and they lose a great deal of money.