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Intraday trading tips and tricks

When you buy a stock, it is up to you to decide what you want to do with it. You may keep it for the next decade if you like, or sell it on the same day. Both options have their own benefits, but if you’re going to be closing your position on the same day, there are some intraday trading tips you should know.

Key Points

  • As the name suggests, Intraday Trading is the process of buying and selling stocks on the same day. Basically, you buy stocks on daily basis, you look for a reasonable price to sell it and then earn your profit.
  • Trading is an example of planning and implementing. You have to have a clear idea before doing anything. Build your portfolio according to your requirements and financial strength.
  • Daily analysis and research is necessary for Intraday Trading. The movement of the market’s momentum must be reflected in the strategy used by a trader. It is not intelligent to use the same strategy everywhere. So update what you are working upon with the trends in the market and then implement.
  • It is advisable to look for liquid shares for Intraday Trading. As the trader needs to square-off their position at the end of the day, it is better to go for large cap shares.
  • Do not try to move against the flow of the market. Even the people who have been trading for over a decade fail to explain and predict the situation of the market.

As the name suggests, Intraday Trading is the process of buying and selling stocks on the same day. Basically, you buy stocks on daily basis, you look for a reasonable price to sell it and then earn your profit. While it looks like the easiest way towards big money, the adage “all that glitters is not gold” still holds true. There are some hidden complexities that might make you lose your path in this seemingly simple venture. Learn how to perform intraday trading here [link to article #82], and then take a look at a few steps down below that could help you trade well.

Do's

  • Portfolio : Trading is an example of planning and implementing. You have to have a clear idea before doing anything. Build your portfolio according to your requirements and financial strength.
  • Indicators : Trading charts depict the behavior of stocks over a period of time along with various indicators which help predict how a particular stock could behave in the future. Include these in the calculation before buying a stock as they could help you understand how it could behave throughout the day.
  • Control : Intraday trading can be as volatile as trading can ever get. Manage to control your greed and fear once you get into this business. It is not always necessary that you earn a profit and it’s same for the other way around too. This may be fast trading but still requires patience.
  • Update : Daily analysis and research is necessary for Intraday Trading. The movement of the market’s momentum must be reflected in the strategy used by a trader. It is not intelligent to use the same strategy everywhere. So update what you are working upon with the trends in the market and then implement.

Don'ts

  • Rumors : The media can get chaotic. And so does the stock market. Do not always pay heed to the rumors around you until and unless you are certain about it. They may deviate you from your strategy in unexpected ways. The best way to deal with rumors is to stick to your strategy till you are certain about news.
  • Single Day Trade : “What you have is, Today”. There is no future tense in Intraday Trading. Do not plan for the future with any stock. Whatever you buy is what you would sell today. Plan according to the single day that you have in hand.
  • Profit : Do not always expect gains in trade. Trade has never been a fair affair. If one gains, the other has to lose.
  • Over Trade : Satisfaction is the key to a healthy life. Cherish your earnings but don't go running behind earning a lot. If you have gained a lot on a particular day and there’s still time left before the market closes, it does not mean that it's the right day to put all your money in. The market never works that way. Accept what you earned and learn to be satisfied.

Tips and Tricks for Intraday Trading

It is advisable to look for liquid shares for Intraday Trading. As the trader needs to square-off their position at the end of the day, it is better to go for large cap shares. Otherwise, you might have to hold the stocks due to lack of trading volumes. Here are some more tips and tricks for intraday traders.

  • Utilising the Stop Loss

    Stop Loss is a feature that enables automatic selling of a stock, if the price falls below a certain limit. It is beneficial for traders as it minimises the potential loss that could occur.

  • Set your Targets

    It is as necessary to book your profit as it is to minimise your loss. Stop your greed from controlling your decisions. At the same time, don’t let fear stop you from pulling the trigger on trades. Look for a targeted amount to trade on any particular day. Do not put all your money in at once.

  • Research

    Look for all the technicalities before buying your shares, such as dividends, stock splits, bonus dates, mergers, etc. It is advisable to add 8 to 10 shares in your wish list and research in-depth about them.

  • Learn when to Exit

    Do not try to move against the flow of the market. Even the people who have been trading for over a decade fail to explain and predict the situation of the market. If the market goes against your expectations, you should know when to walk out.

Wrapping Up

  • Intraday Trading means the buying and selling of stocks on the same day.
  • Trading always requires a person to build a strategy before stepping into it. There are several indicators available as a resource to help a trader understand how and when to use their money.
  • Control your greed and overcome your fear when it comes to intraday trading. This is as volatile as trading gets.
  • Set your targets and never try to go against the flow of the market. If the situation ditches you, it’s never too late to exit.
  • Understand that profit never comes to a person everyday. If one gains, other has to lose.
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