The word intraday literally means ‘within the day’. And as the name suggests, intraday trading refers to the buying and selling of stocks and EFTs with the same trading day. Stocks are bought and sold in a large number with the aim to make more profit by the end of day. And you can do all of it without having to undergo a tedious process involved in other ways of trading. But in order to do intraday trading, you need an active trading account. Intraday trading works on the concept of monitoring the stock market movement throughout the day.
Aspiring day traders often see experienced traders make great profits by intraday trading, and want to experience the same. But, as lucrative as intraday trading seems, it also involves a lot of risk-taking. And in spite of this, there are chances that you may not make any profit at all. You cannot keep taking losses for a long time since it affects your portfolio as well as your core trading capital. Intraday trading for beginners can at times be very difficult, but that’s when a few important intraday trading tips come in handy. These tips can help you learn some practical rules and make you trade better. So here is a list of a few tips for the beginners who plan on venturing into intraday trading.
- Invest only in the liquid stocks
Out of all possible tips and bits of advice that you get from experts, this is probably the most heard and one of the most important advice you will receive. Always invest in liquid stocks. Intraday trading is heavily based on liquidity. Without liquidity, there is no trading. So, for intraday trading, the stocks you choose need to be large-cap stocks with high liquidity instead of mid-cap stocks or penny stocks.
- Identify and follow the market trend
While participating in intraday trading, always follow the market trend. It is a difficult task since you have to predict the market trend and take an appropriate decision. This is where your learning, judgement, analysis and instinct will be put to the test. A trend could be short-lived, which is why a day trader needs to identify the trend promptly and act upon it. Acting against the market trend could probably be one of the biggest mistakes an intraday trader could commit.
- Use Stop Loss Policy
Stop loss policy is all about fixing a price at which a trader can enter the market and a price at which a trader exits it. Fixing these prices in advance protects a trader from unpredicted losses. This is one rule that a trader should mandatorily follow. Once the stop loss is triggered, the intraday trader must exit and trade and not try to adjust the prices with the hopes of making a profit. It will help in the longer run.
- Do not always trust rumours and insider tips
This is a very important tip. Traders often hear a lot of rumours and insider tips that contradict eachother and may cause some confusion while trading. A trader should always rely on their own skills and analysis, and develop their own strategies when it comes to buying and selling of shares. Rumours and tips may be tempting to act upon, but a level-headed trader will only act upon his analysis of the trend.
- Keep analyzing and learning
Learn, learn and learn! This is one of the tips that segregates the successful traders from the unsuccessful ones. Think of every trade as an opportunity to learn new things. Keeping a journal always helps a trader to analyze what went wrong and what could have been done in a different way.
These are some of the tips that have to be kept in mind by beginners to ensure to stay focused and to make it big in the intraday trading market.