What is Intraday Trading?
Intraday trading is a day bound trading, which means squaring the open positions before the day’s trading session ends. Due to the short-term nature of the trade, intraday traders are exposed to more volatility than that of longer-term investors. However, if you have a strategy in place and are open to the intraday trading tips suggested by experts, you can earn maximum returns from intraday trading. Intraday trade can be done with the help of an online trading account or demat account in all the segments such as equity trading, currency trading, derivative trading, and commodity trading.
Below are some of the best intraday tips we have for you so that you can earn a maximum profit through your intraday trade.
• Choose the right stock
Selecting the right intraday stocks for your intraday trade is a crucial factor. It is recommended to select two or three large-cap shares because they are highly liquid. It is not a good idea to invest in mid-caps or small-caps because of their low trading volumes. Squaring of these at the end of the day can become a huge challenge. You must also focus on diversifying your risk. Therefore, choose more than one stocks. This helps you to balance your strategy well as well as minimize your risk quotient.
• Fix the entry and exit price
Many times, a buyer immediately changes his mind after he buys a stock. He may feel that he has chosen a wrong stock and that his selection was not great. Because of which, you may square off or sell even if the price shows just a nominal increase. This may be the reason why you may lose out on the opportunity to make higher profits due to an increase in price. To address this issue, you must have an objective view and fix the entry and exit price before buying a stock.
• Setting up ’stop-loss’ for lower impact
There may be cases that the share you chose has a drop in price on the day of trading instead of rising. Therefore, you need to fix a price below which the fall will not be accepted by you for squaring the position. Hence, you must set a ‘stop-loss’ price as protection and for limiting your losses. Stop-loss is a trigger that is used to automatically sell the shares if the price falls below a specified limit.
• Booking profit once the target is attained
Greed is truly a curse when it comes to intraday trading. It is not only important to cut your losses, but also to book their profits if the target price is attained. If you feel that there is a possibility of a further rise in price, you can always re-adjust your stop-loss level accordingly. You must watch out for intraday calls in case you want to adjust your stop-loss levels.
• Always square off the open trades
Do not confuse buying intraday positions with being an investor. Many times, intraday traders intend on taking delivery of shares in case the target price is not attained. It is not wise to wait for the stock price to recover. The stock may not be a suitable pick for investing, more so because it was meant for short-term.
• Do not go against the market
You cannot challenge the market. Even though you may have done lots of research and analysis on a particular stock, it may not move as per your expectations. What looks like a bull market may soon change its course in no time. Hence, if your share price is not rising as desired, you should sell it the moment it hits the ’stop-loss’ levels. Your time limit is short. Hence, you cannot manage to have a thorough process as an investor and keep waiting for the market to recover. Your focus should be on the short-term intraday gain.
• Research well on the companies you have selected
After you have looked at the intraday calls and stock tips, you need to research on the stocks you have chosen to invest in. Keep a tab on any news that may impact the company or any corporate event that is due for the company. These events could be a merger, split, bonus, dividend, or rights issue. These are significant events, which may have a greater impact on the stock price.
• Choosing the right platform
Intraday trading is all about the frequency of trading and making small quick gains. Therefore, it is highly imperative that you choose the best online trading platform for trading. Your ideal trading platform should be technically sound and allow faster decision-making and execution across sectors, at minimal brokerage charges.
• Timing the market
Since the intraday trade is just restricted to one day, timing the trade is very important. Experts opine against putting the trade in the first hour of the working day as volatility tends to be higher during that hour. Usually, a time between noon and 1 pm is considered as the ideal time. The chances of maximizing your profit are the highest at that hour.