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Everything You Need to Know About Intraday Trading

Personal Finance

When it comes to stock markets, there are two actions you can take. You can be an investor who buys a company stock and holds it for a long time. Or else, you could be a trader and buy or sell a stock within a short time. If you buy or sell a stock on the same day, you are a trader doing day or intraday trading.

The stock market moves up and down the price curve during the entire trading day. So, if you are an intraday trader, the best part is that you can make money on both the moves, up or down. But you must know everything about being an intraday trader before starting day trading.

Intraday Trading Concepts

Some basic concepts you should know about intraday trading are as follows:

1) Square Off:

One essential point you must always remember is to square off your trade on the same day. Squaring off means you must buy and sell the stock by the end of the day’s trading session.

2) Leverage:

This means the broker providing the trading platform gives you extra money to trade. For example, if you have INR 1000 in your trading account, the broker may leverage that amount by five times. It would mean that now you can buy or sell stocks worth INR 5000 during the day. This leverage is only given for intraday trading and not for long-term trading.

3) Day Trading Brokerage:

Every broker who provides a trading account to you charges fees for its services. This fee is the brokerage, which gets charged for every sell or buy order you place. The charge varies from one broker to another.

4) Trading Indicators:

In the trading platform, your broker provides, you will get a chart on display. On this chart, there are many technical indicators. These indicators can guide you in predicting the price movement of the stocks. There are many technical indicators available, and each can predict different aspects. So, you should get an in-depth knowledge of them before starting intraday trading.

Important Intraday Trading Tips

Important tips you must remember while doing day trading are:

1) Select a Business, Not the Stock:

As a day trader, you must decide the stock to trade based on the business performance. Thus, it is vital that you first study the financial statements and the background of the company. This way, you know that the company’s stock will perform well in the stock market. Also, the past price movement of the company will give you a reasonable idea of the possible direction you should trade during the day.

2) Choose High Volume Stocks:

This intraday trading tip is very important for choosing the right stock. Since this trading method is just for the day, pick high-volume stocks. When a stock has high volumes of transactions throughout the day, the range of price movement is wider. Thus, it allows you to make better profits in a short time with such stocks.

3) Stick to a Consistent Trading Strategy:

You must have a consistent trading strategy while day trading. You should know precisely when you will enter and exit a transaction. Make use of the technical indicators available to you to plan your strategy. The vital point here is to stick to the trading strategy no matter the outcome. In the long run, consistency will give better results in intraday trading.

4) Develop the Discipline of Honouring Stop Loss:

A stop loss is a price point that determines the most loss you will incur. Develop the discipline to honour this, as it helps in curtailing your trade losses. The stop loss is vital in day trading as the trading amount and quantity are significant. It means that you make high profits and losses with this trading method.

5) Day Trade with Expendable Money:

When you are doing day trading, it involves greater risk. Thus, ensure that you use expendable money while using this trading method. This trading method even requires calculating your risk capacity per trade and day.

6) Get Rid of Emotions:

It is one of the essential intraday trading tips you must follow. Emotions are the biggest enemy of day trading, and you should ignore them completely. Instead, what is necessary for you is to think objectively. Here, sticking to your trading strategy becomes crucial to make the right trading decisions. This point is going to decide your increasing profits or losses.

7) Never Trade Too Much:

Follow a fixed schedule of trading with only a few stocks per day. It will ensure that you trade only a limited number throughout the trading period. The stock market trend can differ from what you anticipated, and you should stop once this happens. This way, you will cut your losses and ensure better gains in your intraday trading.

8) Keep Track of Market Trending News:

There are many companies of various industries listed in the stock market. A shift in the trend of any one of them can affect the stock market. Thus, keeping track of the stock market news and changes can help you make intelligent decisions. This point is especially vital in day trading as the trading duration is short. Also, the possibility of taking corrective action is limited. Thus, tracking the news will help you enter and exit promptly.

9) Maintain a Trading Journal:

A trading journal is a logbook of all your daily trades. It is where you must enter all your decisions and details of every transaction during the day. This intraday trading tip is a lifeline for all your future trading decisions. Additionally, the trading journal will provide insights into all past right and wrong trades.


If you are someone who has a high-risk tolerance, then you can opt for day trading. This method of trading can be rewarding when you do it properly. Knowledge and practice are the two critical factors when you do intraday trading. Spend time in the stock market and ensure that you consider all the important tips provided above. For further help in day trading, you can confer with Piramal Finance.