The most prominent way to make a living in the stock market is through intraday trading or day trading. Unlike investing, where you must wait months or even years to earn gains, intraday profits can be realized within hours and even minutes.
What is intraday trading?
While talking about intraday trading meaning, it simply means trading stocks and ETFs within regular trading hours inside a single day. You can buy or sell shares quickly without the time-consuming procedure of obtaining actual share certificates. Intraday trading entails closing all active positions before the market closes on the day the shares are purchased.
Intraday trading generally occurs for high beta equities with significant price changes daily. If prices do not change at all during the day, there will be no possibility for intraday traders to profit from that stock.
Keeping in view intraday trading’s meaning, let’s go over everything you need to know about Intraday trading strategies for beginners.
How does Intraday Trading differ from Regular Trading?
Taking stock delivery is the only distinction between an intraday trade and a regular trade. Since you must close off all of your positions in a single day, intraday trading does not include the transfer of shares.
During regular trading, shares are delivered, and after T+2 days, they appear in your online Demat account. You can keep the shares for a while if you trade often. However, shares must be liquidated during intraday trading before the market closes for the day.
Should you participate in intraday trades?
Intraday trading appeals to those who know what is intraday trading correctly, are willing to take risks, and possess the time to monitor the market carefully and execute timed deals since it promises quick profits of a considerable amount. However, intraday trading can result in significant losses if the proper risk management techniques aren’t used.
Intraday trading may seem quite alluring since it offers big rewards. But compared to the delivery market, it also involves more significant risk. Therefore, you might want to steer clear of intraday trading if your day job needs your undivided attention for most trading hours.
Before engaging in intraday trading, you also need to understand finance thoroughly.
How to start with intraday trading?
Spend some time becoming familiar with the market movement trends before you start trading by looking at the daily charts. There are several tools available that offer technical analysis, and they might also be beneficial. Here are some things to consider while starting with intraday trading:
- You must open a trade and DEMAT account before trading in the stock market.
- It is simpler to keep track of stuff when you have a separate account.
- Due to the varied tax treatment of intraday trades, establishing a separate account simplifies tax calculations.
- After that, you can register for the appropriate intraday trading tools.
Remember, invest wisely. Put only as much money into it as you can bear to lose. While you could enjoy the rush of the stock market, investing a sizable portion of your income in intraday trading is not a good idea.
Also Read: What is a Trading Account?
When to trade?
The timeframe of intraday trading is crucial for making profits, just like stock selection. You might not be able to profit from your trades if you start an intraday transaction at the incorrect moment.
Long-term intraday traders might benefit significantly from finding the appropriate period. Utilizing these times can help you work as efficiently as possible because they are recognized for significant market activity.
You must know these intraday trading tips for effective trading. The ideal opportunity for intraday trading is within the first hour or two when the stock market is open. However, most share market trading channels in India start operating at 9:15 am. Why not begin at 9:15 instead?
Trading for the first 15 minutes may not be as risky for experienced traders. Waiting till 9:30 is advised for newcomers. This is because stocks probably respond to news from the previous night’s market opening in the initial moments after it opens.
What Kind of Stocks to Choose for Intraday Trading?
The most excellent stocks for intraday trading include a few characteristics: liquidity, volatility, and correlation. Applying the proper entrance and exit techniques, however, is equally crucial. Decide which stocks are comparatively solid or weak compared to the index, then focus on them.
You have until the market closes to square off your position in intraday trades. You must thus pick equities that have sufficient liquidity to carry out these deals. For this reason, many advise highly liquid securities such as large-cap stocks.
The most excellent stocks for intraday trading include a few characteristics: liquidity, volatility, and correlation. Applying the proper entrance and exit techniques, however, is equally crucial.
Separating the present market pattern from outside noise is necessary for choosing the appropriate stocks for intraday trading. So a trader’s job is to profit from that trend. If done correctly, this trading may be a profitable experience.
To profit from intraday trading, one requires short- to medium-term methods. You may also succeed as an intraday trader if you have the necessary resources and are prepared to develop the needed abilities.
We hope this blog provided you with the necessary intraday trading tips and helped to upscale your intraday trading strategies!