Intraday trading has piqued the interest of market players for years. But did you realise that only 10-15 out of every 100 intraday traders succeed? This session’s topic is summarised here. Watch the complete video at the conclusion of this article to have a better knowledge of how to put the intraday trading principles into practise.
Intraday trading is a trap that novice traders frequently fall into. After all, who doesn’t desire a quick way to make money? However, you must be aware that day trading comes with a great risk of losing your money. Let us help you get familiar with the basics of trading before you enrol in the intraday trading course online.
What Makes Intraday Trading So Exciting?
There are three main reasons why intraday trading is so intriguing to people.
- The stock market offers the opportunity of generating far higher returns than the 6–6.5 percent that may be earned from bank interest.
- The second advantage of intraday trading is that the position is opened and closed on the same day. As a result, at the end of the day, the full trading money is freed up.
- Traders do not have to worry about gap up or gap down openings the next day because no positions are carried over.
Rule 1: Look for stocks with a lot of liquidity.
The first stage in choosing equities for trading is to look for those with a large number of buyers and sellers. These are the ones that have a lot of liquidity and modest bid-ask spreads. These equities allow you to trade with tight margins, keep your costs down, and exit positions swiftly in poor market conditions.
The top 100 stocks traded on the NSE are represented by the Nifty 50 and Nifty Next 50 indexes. These are the stocks with the most liquidity as well. These stocks may be used to find the best liquidity and bid-ask spreads.
Rule 2: Look for stocks with a lot of volatility.
You must only trade stocks that have a daily volatility greater than the Average Daily Volatility of all equities traded in futures and options. There’s a strong chance these stocks will gain traction, and you’ll have plenty of opportunities to trade them.
Watch the video at the bottom of this article to see the exact step-by-step technique for generating a list of high volatility stocks to track.
3rd Rule: Use Scanners
After you’ve constructed your watchlist of stocks with strong liquidity and volatility, you’ll need to filter it down even further using stock scans.
Rule 4: Select the Appropriate Entry and Exit Points
After you’ve narrowed down your stocks, the following stage is to appropriately identify entry and exit opportunities.
- If your stock is among the Top Gainers and it rises over the high price set in the first 10 minutes after the market starts, you should buy it. Your stop loss will be the intraday low price.
- Sell your stock if it is in the Top Losers list and falls below the low price set in the first 10 minutes after the market begins. Your stop loss will be the intraday high price.
Do Your Research Before Buying
Intraday trading for profit necessitates extensive study before to purchase. Keep a watch on your top 8 to 10 stocks and keep an eye out for price-moving events in the company, such as mergers, bonus declaration dates, dividend payments, and so on. To make an educated judgement, you can conduct research on the degrees of support and resistance.
Choose liquid large-cap stocks
Trading intraday necessitates squaring off open positions before the trading session ends. As a result, it’s best to invest in shares of high-liquid, well-performing corporations. You can choose large-cap stocks instead of mid- or small-cap stocks.
Determine your entry and exit prices.
Before you enter the market, you must first choose your entry level (the price at which you wish to buy) and your objective price (the point at which you want to sell). Charts and technical information can be used to accomplish this. It’s critical to keep to your entry and exit prices once you’ve made your selection.
Make use of Stop Loss
Using a stop loss is another excellent intraday trading strategy. A stop loss order is a purchase or sale order made with a stockbroker when a stock reaches a specific price. Its purpose is to keep a trader’s losses to a minimum if the price moves in the opposite direction of his predictions.
Golden rules of intraday trading
There are a few more rules that every trader should be aware of:
- Take good care of your money. To avoid large losses, always assess the risk and return for each transaction and maintain strict stop losses.
- Allowing your lucrative transactions to lose money is never a good idea.
- Overtrading should be avoided.
- Remember that trading is all about getting in on the price action as soon as possible. This will allow you to benefit regularly from the markets by capturing the stock changes to the greatest extent feasible.
Conclusion
The stock market trading universe is a massive one. Intraday trading, short-term trading, and long-term trading are all examples of trading strategies. Intraday trading is one of the most exciting trading tactics for many traders. Intraday trading (sometimes known as day trading) is when you purchase and sell equities on the same day. Learn more about the same with the help of experts at the Finlearn Academy. They will guide you with the entire thing from the scratch.