“Intraday Trading” or “Day Trading” are quite commonly used terms in stock market. Do you know the exact meaning of intraday trading? Have you gone through the simple basics associated with intraday trading? What are the important points that you need to keep in mind as a beginner trader? If yes, great! If not, don’t forget to read through this entire post.
Let’s begin exploring the answers to the above queries through this exclusive beginner’s guide to intraday trading.
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What do we mean by Intraday Trading?
Buying and selling securities within the same day is referred to as intraday trading or day trading. So, in intraday trading, all positions are squared off before the market closes, a major point of its difference with regular trading. While a regular trade settles over a span of days, intraday trade gets settled on the same day during the exchange trading hours.
The main objective of intraday trading is to harvest profits from the fluctuations in the stock prices during the day. The trader’s primary intent is to make quick profits rather than looking for long term investments.
Intraday traders are the ones who have high risk taking capacity and can actively follow the stock markets. The concept of intraday trading might seem a bit tricky for novice traders.
Fundamentals for Beginner Intraday Traders
Don’t worry even if you are a beginner in stock trading. Just keep your basics clear! Knowing few golden rules can support you in smoothing your intraday trading journey ahead.
1. Open a Demat and Trading Account
This is the very foundation of intraday trading. You need to open demat and trading account with a reliable stock broker to initiate your trading activities. Nowadays, opening an online demat and trading account is just few clicks away. A simple account opening process and you are ready to dig deeper into the stock market.
Select a reputed stock broker charging low brokerage, offering technical & research support plus handy trading tools.
2. Stay Disciplined while Trading
Earning through stocks and getting rich is not so easy. You have to stay disciplined to attain your desired results. No hard and fast rules to be followed. Keep your eyes and ears open, carefully observe the market scenario to reap better benefits.
Intraday trading is very fast-paced wherein traders need to be quick on their toes. So, stay alert and fully active!
3. Avoid Emotional Trading
Day trading sounds really attractive especially to newbies. Hearing about huge profits and successful investors, one tends to get carried away. But, you need to keep control of your emotions and act wisely. Don’t be overly affected by the big profits or losses. No need to be flown away with the heat of the moment.
Stay cool! Look for a low-risk entry and exit in stock trading.
4. Build a Sound Researched Trading strategy
Intraday trading involves squaring off positions in the same day. So, selection of stocks with high liquidity seems to be a good idea. Further, timing the market also plays a significant role for day traders. Experts advise to avoid taking a position within first hour of trading when the market is highly volatile.
You cannot perfectly time the market. But, gradually you can learn to manage your risk and reward portfolio.
5. Focus at Profits but Beware of Losses too
Although, day traders have higher return potential as compared to long term investors. But, no need to get overexcited considering the eye-catching results. Stock markets are subject to different types of risk. Don’t overtrade and restrict yourself to trade only with the amount of excess capital that you can afford to lose.
A systematic approach needs to be followed for the rewards to exceed the potential risks.
6. Keep Learning & Improving with Your Trading Mistakes
Intraday trading is a continuous learning process. Every trade you do gives you a new aspect and a fresh experience to share.
Learn from your mistakes! Be open-minded and welcome every bit of financial knowledge you can gather around.
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Bottom Line of Intraday Trading!
No doubt, playing safe in the stock markets requires a lot of patience, practice and expertise from the trader’s end. As a newbie trader, you can still land yourself in a better place by following proper risk management techniques.
Watch the market actively & carefully and time your trades to perfection in order to attain your financial goals. It may take a substantial time to become a successful trader, but these simple rules can be your perfect guide.
Now, that you have learnt some crucial intraday trading basics, you are better equipped to manage your stock activities. Remember, these are just thumb rules and not any sort of recommendations.
Are you a day trader or you believe in long term investing strategy only? Any valuable opinions or any stock trading tips you wish to share? Feel free to do so.