Intraday Trading is completely distinct from an investment in long-term equity. Intraday trading and strategies required a good level of understanding of how different aspects such as a chart, candlestick patterns, and trading indicators knowledge work together. In this article, we share the best intraday trading tips and strategies.
Who is new to the stock market we are advised you to invest only the amount you can afford to lose without facing financial difficulties.
The solution left out for the new individuals is to learn the basics of intraday trading, including the best trading strategies and techniques, and then start attempting trading.
Below are a few tips for intraday trading that will help the trader in making the right decision.
Choose Liquid Stocks
Intraday trading involves buying and selling a set of stocks on the same day before market closing, i.e., squaring off open positions. Choose 2 or 3 large caps stocks that are highly liquid for intraday trading. Avoid stocks of small and mid-cap that may not be sufficiently liquid. Otherwise, your squaring-off order may not get executed.
We advise avoiding trading all your money in a single stock. We recommend diversifying your intraday positions across 2-3 stocks. This can help balance your intraday trade strategy and minimize your risk. If you are a risk taker then go for only 1 trade
Determine Entry and Exit Prices
You need to determine your entry level and target price before putting the purchase order. Many stock traders suffer from buyer’s fallacy. This is when the buyer immediately has a change of mind after purchasing a stock. The trader suddenly feels that the selection was not as good as he believed at the time of purchase.
Always Set a Stop-Loss Level
It is also possible that the stock you chose to buy at a specific price falls on the day you trade instead of rising. You have decided how low the stock can be allowed to fall before you square off your buying position. It is also important to fix your gain and loss from a particular trade.
Good traders keep a stop loss at 1/3rd of the expected benefits. Most specialists would suggest that this is the most significant tip you’ll ever get for intraday trading. Before setting a stop-loss rate, you can study intraday calls that are buying and selling suggestions.
Don’t Move against the Market
Even experienced professionals are not able to predict market movements. There are times when all the technical variables represent a bull market; however, a decrease may still occur.. These factors are only indicative and do not provide any guarantees. If the market moves against your expectations, to prevent enormous losses, it is essential to exit your position.
Avoid being an Investor
The most common mistake done by intraday traders is to take delivery of stocks in case the target price is not met. The trader waits for the price to recover to earn back his money. This is not recommended because the stock may not be worth of investing, as it was purchased only for a day trading.
Always Close All Open Positions:
In case their goals are not attained, some traders may be tempted to take delivery of their positions. This is one of the greatest mistakes and closing all open jobs is essential, even if traders have to book a loss.
Not more than 3 trades per day:
It is suicidal to initiate various trades during a trading session. Even expert traders don’t initiate more than 2-3 trades per day. The reason is, stocks are extremely volatile for intraday trading, and the trader is on their toes until the position is squared off.
Research Your Target Companies Thoroughly
When you identified a set of stocks by going through intraday calls, make sure to research them thoroughly. Any news regarding stock you have to find out. These include, among others, purchases, fusions, bonus problems, inventory splits, and dividend payments. These might be as essential as being up-to-date with technical standards.
Avoid Intraday Trading in News/Results-driven Stocks:
The news or outcome response on inventory price is unpredictable. The stock price goes throughout, and the trend can not be identified by traders. We observed reactions that were opposite than we are expecting. That’s the main reason why we avoid intraday trading in news-driven stocks.
Spend Time:
Intraday trading is not for individuals who are employed in a full-time job. Traders must be able to monitor the market movements throughout the market session from the opening(9.30) bell until its closing(3.30) to enable them to make the right calls as required.
Breakout:
Breakout strategies most of the time give a positive result when the price clears a specified level on your chart, with increased volume. The breakout trader enters into a long position after the Stock breaks above resistance. Alternatively, you enter a short place once the stock breaks below support.
Demand-Supply Imbalances:
The Indian stock markets follow the average demand and supply rule price reduces when there is no demand for higher supplies and vice versa. An important intraday trading tip is to look for stocks where drastic demand-supply imbalances exist and opt for these as entry points. Users need to know by researching and studying historical motions to recognize such points on the price chart.