What is Intraday Trading?

Buying and selling equities on the same day, during the exchange-specified trading hours, is known as intraday trading. With the goal of realizing profits in a single day, many stocks are systematically acquired and sold. Whether a person is a seasoned trader or a novice, they may always benefit from this type of trading because the market's indicators and trends will appropriately direct them.

Intraday trading basics

Buying and selling equities on the same day is referred to as day trading. Utilizing online trading platforms is how it's done. Let's say someone purchases shares of a business. They must clearly refer to "intraday" in the platform's interface. This makes it possible for the user to purchase and sell the same number of shares of the same firm on the same day, prior to the market's closing. Gaining profits through the movement of market indexes is the goal. As a result, many also refer to it as day trading.

If you invest in stocks for the long term, you can expect to receive excellent profits. However, they might still support your financial goals in the short term. As an illustration, a stock starts trading at Rs. 500 in the morning. Within a couple of hours, it quickly increases to Rs. 550. Within a few hours, if you had bought 1,000 stocks in the morning and sold them for Rs. 550, you would have made an astounding profit of Rs. 50,000. It is referred to as intraday trading.

How can I pick profitable stocks to buy for intraday trading?
Since intraday trading carries significant risks, picking the right share for intraday trading is crucial before making an investment. You have to

Select highly liquid equities since equity shares are incredibly volatile due to market swings.
Prior to making an investment, you should concentrate on cyclical variations by examining 52-week high and low values.
Invest in stocks with price fluctuations that are moderate to high. Avoid market value changes of more than 3% because every fall in the stock market greatly increases the risk of loss.
Invest in an intraday stock that has a strong correlation with a reputable stock exchange's benchmark index. You can use it to research and evaluate any significant changes in share prices that may occur due to a changing index value.
Increased trade volume, which represents extreme supply and demand, can aid in capital appreciation.

Features of intraday trading

You must indicate if an order is specific to intraday trading on online trading platforms. In that instance, you open an investment position in the stock and close it during the trading day. If you don't close it yourself, the position will automatically be squared off at the market's closing price. In intraday trading, the stocks you buy and sell do not become your property. The objective of intraday trading is to profit from price fluctuations that occur during the day, not to own the stocks.

Leveraging is the process of borrowing funds from your broker to increase your purchasing power and maybe increase your investment returns. When trading intraday, for instance, you can use the benefit of leverage to take a higher exposure while only paying a portion of the open position. Leveraging has terms and restrictions that you should become familiar with from your broker in order to reap its benefits.

If an order is specific to intraday trading, you must indicate that on online trading platforms.
Within the same day's trading hours, you open a position in the stock and close it.
The position is automatically squared off at the market closing price if you don't close it yourself.
The objective of intraday trading is to profit from price fluctuations throughout the day rather than to acquire equities.

Basic Intraday Trading Rules

Intraday trading on the stock market is extremely volatile, therefore those who are unprepared for it may wind up losing money. Thus, before engaging in intraday trading, you must adhere to a few fundamental principles.

  • Market Timing: People are advised against trading right as the markets open, especially within the first hour. The best time to make money is between noon and one.
  • Create a profitable investment plan and follow it through: For intraday trading, it's essential to have a clear strategy in place and to choose the entry and exit prices before beginning a transaction. The use of stop-loss triggers to reduce the possibility of losing positions is one of the most crucial intraday trading techniques. It is also suggested that you close the position and anticipate a greater profit when the stock price hits the target price.
  • Exiting the Position in Unfavorable Conditions: If the circumstances are favorable, you must close out the open position and book the profits. Instead of waiting for the stop-loss trigger if the scenario is not favorable, you must abandon the trade to minimize losses.
  • Invest Small Amounts: One of the most important pieces of intraday advice is to invest smaller amounts because it is challenging to foresee the highly volatile market movements and beginners can easily get caught in the loss trap.
  • Before you begin intraday trading, learn the basics of the stock market and perform technical analysis. Then, choose the best share to trade through liquid stocks: Trade only a small number of highly liquid stocks with large volumes to make it simple for you to close open positions prior to the end of intraday trading sessions.
  • Always Close All Open Positions: If the targets are not met, don't take delivery of your positions, even if you must book a loss.
  • Spend Time: Intraday trading isn't a good idea for people who are working, especially for those who don't have the time to monitor market moves throughout the trading session.

Intraday Trading Strategies, Guidelines, and Advice

  • 2 or 3 liquid shares should be chosen.
  • Figure out the entry and target prices.
  • Making Use of Stop Loss to Reduce Impact
  • When your goal is attained, book your profits.
  • Avoid investing; carefully consider your wish list.
  • Keep your distance from the market

Important Intraday Trading Indicators

A person may find it challenging to deal with several simultaneous happenings in intraday trading, regardless of whether they are a seasoned investor or a novice. As a result, when trading, you must pay attention to patterns and indications. When engaging in intraday trading, keep the following important indications in mind:

Moving Average

This trend indicator uses graphics to describe the behavior of stocks over a predetermined time period. It displays a stock's opening and closing prices. The graph's minimal average line displays the stock's average closing price over this period. You will be better able to comprehend the movement of goods and price variations as a result.

Bollinger band

You can use it to calculate the stock standard deviation. The moving average, upper limit, and lower limit of the three lines show the ranges or zones of volatility in which a stock price can move. These variations in stock prices over time serve to localize price variations and can be used to make investments.

Momentum oscillator

Stock prices are extremely erratic, mostly depending on the state of the market. Momentum oscillators aid traders in predicting whether a stock price will increase or decrease over time. It displays whether the stock price is continuing to rise or decline and is represented on a scale from 1 to 100. This aids traders in timing their stock purchases.

Relative strength index (RSI)

RSI is calculated using the following formula: 100 - [100 / (1 + (average profit / average loss))]

For technical analysis, the Relative Strength Index serves as a momentum indicator. It shows how the stock price has changed over time. Additionally, it displays visually the likelihood of buying or selling a stock on a scale of 1 to 100. Overbought and oversold conditions are indicated by RSI readings over 70 and below 30 respectively.

Also Read: What is BTST Trade

The benefits and drawbacks (pros and cons) of intraday trading

The benefits(Pros) of Intraday Trading

There’s no need to work overnight shifts.

Holding shares overnight carries a real risk in the stock market. When it comes to intraday trading, this danger is eliminated. All positions are squared off on the same day, which is the main benefit of intraday trading. Since no ownership remains once the trading session has ended, there is no possibility of your money becoming "trapped."

Gain from declining markets

One advantage of intraday trading is that you might gain from a declining market as well. Using a method known as "short selling" allows for this. In essence, short selling involves selling a stock at a premium and then repurchasing it at a later, lower price. In contrast to the cash segment, you can profit from a fall in the stock price by selling early and buying later.

Utilizing margins

Due to the margins that brokers offer, intraday trading in India might be even more rewarding for day traders. As a day trader, you will only be required to pay a small portion of the overall order value. This serves as protection against losses. Due to their high brokerage, it may be as much as 10-15 times for seasoned gamers. But even a novice trader can make larger bets by employing the preset margins that stockbrokers offer as a convenience to all-day traders. Margin may be very beneficial and profitable for day traders when used wisely.

Master technical analysis.

Fundamental research on a firm is essential if you are a serious investor in the cash market. It is the analysis of a company's financial standing, place in the market, and relationship to the overall economy. It can take a lot of time and effort to do this. The fact that you don't have to spend as much time on the fundamental study is another advantage of intraday trading in India. Instead, you can rely on technical analysis. The study of charts for technical analysis is done in order to identify trends and forecast a stock's movement. It is feasible to recognize distinct patterns with time and patience, which will make it simpler for you to plan intraday trading methods.

Taking the market’s pulse

The fact that intraday traders receive first-hand knowledge of any changes in market attitude or mood is another definite benefit. Day traders are the first to experience the effects of any event, whether it be social or economic. You have a chance to benefit if you can quickly identify the signals of such situations.

Possibility of earning a steady income

There is no disputing that intraday trading is risky, but the only factor contributing to its steady rise in popularity is the huge rewards. With the right trading techniques, you can quickly create a second source of income by engaging in trading for a few hours each day. You can do this in the convenience of your home or workplace. With well-planned investing techniques, it might eventually replace your main source of income.

The drawbacks(Cons) of Intraday Trading

  • Because less money is needed for intraday trading than for delivery, investors are exposed to more risk and any poor choice could result in the loss of all capital.
  • Losing intraday transactions negatively impacts a trader's mental health.
  • The majority of traders lose money because they frequently trade as a result of receiving free intraday trading tips from numerous WhatsApp and Telegram groups.
  • If the market moves in opposition to your trading position, you might lose all of your money in a single day.
  • Not every day in intraday trading is profitable.
  • In intraday trading, the stress level is exceptionally high.
  • In intraday trading, close attention is needed at all times.
  • In intraday trading, there are no dividends or incentive perks offered.
  • Day trading can be monotonous due to the length of time you must spend in front of a screen monitoring the market.

For Learning Intraday Trading: Check out this link.

FAQs(Frequently Asked Questions) List Of Intraday Trading

What is Intraday Trading?
Which indicator is best for intraday trading?
How to do intraday trading in Zerodha?
Is Intraday Trading profitable?
How does Intraday trading work?
Can govt employees do intraday trading?
Which timeframe is best for intraday trading?
What is intraday trading in India?
Which are the best free intraday trading tools for Indian investors?
How to choose the best stock for intraday trading?
What is the difference between Intraday trading and Delivery trading?
Which is the best research analysis company for intraday trading?
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Is Laptop required for Intraday Trading?
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How can I start intraday trading?
Can I used astrology for intraday trading?
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NSE Guide for intraday trading?
Best Intraday trading tips.
Intraday trading strategies.
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Intraday Margin.
How can I start intraday trading?
Zerodha intraday margin?
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Intraday square off time.

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