Intraday stock trading is one of the riskiest yet most lucrative stock trading strategies. Day trading, also known as intraday trading, is the buying and selling of equities within a single trading session. Essentially, you buy intraday stocks daily, hunt for a fair price to sell them for, and then take the profit.
Share values are constantly changing throughout the share market today. Intraday traders’ sole purpose is to profit from these price fluctuations. They purchase and sell various types of stocks after making calculated moves on the same day within trading hours, i.e., from 9:00 a.m. IST to 3:30 p.m. IST. Since everything is done on the same day, it is known as intraday stock trading.
Your broker will decide on your position in the market. Whether a person is an expert trader or a newcomer, this type of trading is always advantageous but comes with a lot of market risk. So, it’s better to understand the subject as much as possible, including all kinds of current market indications and trends, which would help you make better choices.
Delivery trading versus intraday trading
Contrary to intraday trading, delivery trading is used when you buy a share but don’t sell it on the same trading day. The equities purchased through delivery trading are credited to your Demat account. You can keep it for as long as you wish before selling it—days, months, or even years. Thus, you remain the owner of these stocks. Investors in delivery trading look for gains by tracking the stocks’ long-term price movement.
Pros of intraday trading
- The trader can benefit from the changes in the market price of the equities.
- The merchant can avoid delivery fees.
- If the trading platform is set to do so, the position is squared off automatically if the trader does not close the deal.
Cons of intraday trading
- The trader won’t be the owner of the shares he transacted that day.
- If the closing rate is unfavourable, the trader suffers a loss. He could have to give up profits if the market is adverse.
Best Tips You Should Follow For Intraday Stocks Trading
Here are some basic tips for intraday trading that you can use to make money on the stock market.
- Select the right stocks: Choosing the right portfolio to buy should be your main goal when starting intraday stocks for today. Not all stocks are suitable for intraday trading. Since you would be buying and selling stocks during a trading session, you would need to choose ones with high levels of liquidity. Buying and selling will be easier as a result of this. Before purchasing the stocks, carefully evaluate them.
- Remember to set a stop loss: When trading shares, investors should always select a stop-loss limit. Following a downturn, the share price can occasionally rise to a high level. Setting a stop loss limit will automatically cause their shares to be sold off before a downturn. As a result, it will stop investors from losing money.
- Investors should not get too confident when a stock hits a record high during an intraday trading session and expect it to climb more since the possibility of a decline is high. Therefore, investors should exit the stock after the target is reached and it records profits at an acceptable level.
- Establish entry and exit price goals: Even if it means missing out on the opportunity to purchase the stock, set a price at which you would want to buy it and adhere to it.
- Set a target price at which you’d like to sell the stock similarly, even if doing so means you could miss out on any potential future profits.
- The stock market is highly unpredictable. Most theories about the stock market are based on basic research and technical analysis. Some investors make losses because these studies are just indicative and not concrete. Therefore, when an investor thinks that the price of the stock could increase but is actually in constant decline, the investor should choose to sell the shares to avoid any substantial loss.
- Investors in intraday stock markets should manage their funds carefully since they risk investing more funds to make significant gains. If the market is bad, the investors may lose all their invested money.
- Always follow the fashion: When there is a significant market trend, stock purchases are advised. And if it’s bad, shorting stocks makes sense. A contrarian market outlook is never a good idea because it can backfire. For example, when the market is bullish, many people sell equities short in the hope that the price will reverse. Such reversals are infrequent.
Intraday Trading Tips for Beginners
- Several charts are available to show how the share has performed, including bar charts, graph charts, candlestick charts, and 5- and 15-minute charts. These enable investors to gauge a share’s performance and trade based on it.
- Consider setting a stop-loss limit to prevent yourself from suffering a significant loss.
- Never hurry a trading session; thoroughly analyze the intraday stocks before investing.
- Pick the best references while evaluating the share market today.
Use these intraday stock trading tips to help you become a better trader and make the most of your next trading sessions. Intraday trading involves a significant commitment of time to analyze, research, and review the performances. Even though intraday trading is riskier than normal trading, it may be one of the most rewarding tactics if done correctly.
If you need help with finances, you can always take the help of a financial expert like Piramal Finance. They will suggest which trading options and stocks are best for you and help take care of your personal loan requirements, if any.