Intraday Trading Tips, Strategies & Basic Rules

Intraday trading is riskier than investing in the regular stock market. Most traders, especially beginners, lose money in intraday trading because of the high volatility of the stock markets. Convention says that one should not risk over two per cent of their total trading capital on a single trade to ensure the right risk management in intraday trading. It is important, especially for beginners, to understand the basics of such trading to avoid losses – the risk of ignorance is greater than the market risk itself.

Tips for Intraday Trading

Intraday trading involves squaring open positions before the end of the trading session. This is why it is recommended to choose two or three large-cap shares that are highly liquid. You can also take help from Investing in mid-size or small-caps can result in the investor having to hold these shares because of low trading volumes.

Develop an informed short-term trajectory beforehand and stick to it

Following points are essential pieces of a short-term trajectory:

1) Determine your entry level and target price beforehand. It is common for a person's psychology to change after purchasing the shares. As a result, you may sell even if the price sees a nominal increase. Due to this, you may lose the opportunity to take advantage of higher gains because of the price increase. You can also take help of

2) Book your profits once the target is reached. Uninformed greed may drive you to keep a stock beyond the necessary time-frame and increase the risk of a fall in prices. If you insist on staying on, make sure you readjust a stop-loss price to meet the new expectations.

Stop loss is a trigger that is used to automatically sell the shares if the price falls below a specified limit. For investors who have used short-selling, stop loss reduces loss in case the price rises beyond their expectations.

Realign your strategy for intraday trading (as opposed to long-term investment)

Value investment adopts fundamentals while the former considers the technical details. It is common for day traders to take delivery of shares in case the target price is not met. He or she then waits for the price to recover to earn back his or her money. This is not recommended because the stock may not be worthy of investing, as it was purchased only for a shorter duration.

Research Your Wishlist Thoroughly

Investors are advised to include 8 to 10 shares in their wish lists and research these in depth. Knowing about corporate events, such as mergers, bonus dates, stock splits, dividend payments, etc., along with their technical levels is important. Using the Internet for finding resistance and support levels will also be beneficial. Of course, researching the fundamental concepts and jargon of the stock market is necessary.

Don't Move against the Market

Even experienced professionals with advanced tools are not able to predict market movements. There are times when all technical factors depict a bull market; however, there may still be a decline. These factors are only indicative and do not provide any guarantees. If the market moves against your expectations, it is important to exit your position to avoid huge losses. Intraday trading provides higher leverage, which effectively provides decent returns in one day. Being content is crucial to succeeding as a day trader.