Intraday trading, refers to the buying and selling of securities on the same day. It is one of the riskiest trading strategies. However, it may be one of the most profitable types of trading as well. Therefore, intraday trading may be a suitable approach if you’re an aggressive investor or a trader. Information about intraday trading is provided in this article, including its basics, features, and profit-making opportunities. So let’s read the article ahead.

Meaning of Intraday Trading

Intraday trading involves the purchase and sale of stocks on a single day. Suppose an investor buys shares in a company. The investor must specify ‘intraday’ in the order-type section. This allows the user to buy and sell the same number of shares of that company on the same day before the market closes. The aim is to make money from price changes of the stock It is also known as day trading. Looking at trends and indicators is always a good thing for intraday trading, whether you’re an experienced trader or a beginner.

The Basics of Intraday Trading

Choosing the right broker is the first step to mastering the basics of intraday trading. In order to help you find the best intraday trading stocks, brokers provide detailed guidance and tracking of research reports. Intraday trading stocks are different from delivery stocks. Some proven tips for the success of an intraday trade are as follows:

Open an Account

To start intraday trading, you’ll need a Demat and a trading account in the market. Various brokers offer 100% online account opening. To open a free Demat and trading account and begin trading, all you need to do is upload your KYC (Know Your Customer) documents, These include your PAN card, Aadhar card, and a photo. In India, generally there are two types of trading accounts that can be opened: cash and margin.

Pick Liquid Shares

Liquid shares are stocks with large volumes and very sharp movements in both directions. These stocks are very liquid because of the high participation of investors. This means that you can buy and sell any quantity of shares without worrying about affecting the price. In general, the most liquid stocks are large-cap stocks that are part of an index such as the NIFTY 50 or the NIFTY BANK. On the other hand, a large number of mid-cap or small-cap stocks are not liquid and you may spend several days trying to build momentum if you pick them.

Identify the Entry, Exit, and Stop Loss

Before placing a trade, professional traders will assess the risk-reward before making an investment. For example, you’re willing to lose INR 1 in order to get INR 1, your risk-reward ratio is 1:1. In the same way, you are willing to lose INR 1 in order to receive five times the benefit if the ratio is 1:5. Liquid stocks move rapidly, and sometimes you don’t have time to execute a trade immediately.

Follow the Market Trend

When traders try to challenge the market, they tend to ignore the basic principles of intraday trading. As a rule, until you’re certain that your research is of the highest quality, you won’t be able to test the market. In the market, you will find three main types of trends: uptrend, downtrend, and downside. Buying is a better course of action than selling when the market is trending upward. On the other hand, if the trend is downward, you can sell first and buy later.

Use Technical Analysis 

Analyse price charts, patterns, or technical indicators. Moving averages, RSI, MACD, and support and resistance levels are popular tools. These indicators shall help you to determine the appropriate entry and exit points. 

Risk management

Do not risk more money than you could afford to lose. To reduce losses and to comply with the risk-reward ratio, make sure you put in place limit orders. They will help you to restrict your losses in case the stock price starts falling.

Conclusion

Intraday trading is more risky than investing in the stock market as a whole. To avoid losses, it is important to know the basic principles of this type of trading, particularly for inexperienced traders. Individuals are advised to invest only the amount they can afford to lose without facing financial difficulties and understand the essential tips for profitable intraday trading. To simplify your trading, BlinkX Demat app provides high-quality research reports and company-specific data. You’ll be able to study reports, check the news, see charts, and learn how to make a good intraday move.

“This article is part of sponsored content programme.”

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