Intraday trading is the practice of buying and selling security positions within a single day. It is one of the most exciting trading strategies in the stock market. But with this excitement comes the extremes of making hefty profits or losing one’s hard-earned money. So, it is important to determine how best to go about it.
A clear understanding of stock market basics and a plan of action can bring in profits in day trading. Lacking any of these could lead to disaster. So, setting your priorities is the first stepping stone.
Online share trading has simplified the process of trading on the exchanges. But it still takes a lot to become a successful trader. Intraday trading for beginners might seem complex at first glance because of the shorter timeframe. But you can make profits by sticking to well-planned strategies. Here are a few tips to manage profitable intraday trading.
Follow the market trend: Play it safe
Traders now use advanced tools to predict market trends. There are cases where technical factors indicated a bull market, but the stock prices fell sharply. So, it is clear that these factors are only indicative and do not guarantee anything. That is why going with the market trend is often a safe bet. It is also important to exit your position when the market goes against your expectations.
Set up stop loss: Bring down the impact
This strategy ensures that emotions do not override your decision. A stop loss triggers the automatic sale of your shares when the price falls below a specified limit. This does not allow your loss to go beyond a certain amount.
Lose small: Gain big
Are you among those who lost a large amount of money in a couple of trades? Well, most beginners make the common mistake of investing too much in only a few trades. In stock trading, money management is crucial to make your trades profitable. To succeed as a trader, you must have strong money management skills as well as excellent online share trading strategies. You should aim to lose small and gain big, but never the reverse.
Fix entry and target prices: Strike while the iron is hot
Every professional trader has a series of factors determined beforehand. The entry level and the target price is one of them. Being certain of this helps you stick to the original plan. Inefficient traders do not consider these factors and often sell shares in case of a nominal rise in prices. But they miss the opportunity to take advantage of higher gains.
Stop being an investor: Think like a trader
Any kind of investment in the financial market means share purchase. However, the tactics are different for each. While the investor focuses on the fundamentals, the day trader factors in technical details. Day traders often take delivery of shares in case the stock does not meet its target price. They then wait for the price to recover and earn back their money. This is not a good practice: the stock was purchased only for a short period and may not be worth investing in at all.
Book profits when the target is reached
Almost every day traders suffer from excessive greed or fear. However, to make every trade profitable, it is important to cut losses and book profits at the right time. For this, you must set your target price beforehand and let the stocks swing along. If you see the possibility of a price rise, readjust the stop loss trigger to match your expectations.
Stock trading can provide great returns if you maintain the strategy of losing small and gaining big. It is beneficial to open an account with a reliable brokerage firm like Kotak Securities to get regular tips and updates on the latest market trends. Also, make sure to research your wish list thoroughly before placing new orders.