Hi Friends, Welcome fingroow .Today we are going to discuss about Intraday trading or day training so let us start with what are the various factors about Intraday trading.
Intraday trading involves buying and selling stocks on the same trading day. Here stocks are bought not for investment but for profit by emphasizing the movements of stock indices. Thus the fluctuations in the share price are monitored to make a profit from the trading of shares.
An online trading account is set up for intraday trading. When doing intraday trading, you must specify that orders are specific to intraday trading. It is also called intraday trading because the order is categorized before the end of the trading day
How to do intraday trading ?
Different financial avenues have opened up for the common man. What was once considered to be the forte of only professional traders and financial firms is now accessible to everyone. We are, of course, referring to day trading also known as intraday trading.
Intraday trading refers to the buying and selling of securities within the same trading day. The objective is simple- to buy securities at a lesser price and sell them when the price is higher on the same day.
You do not have to be a financial expert to know how to do intraday trading. However, you do need to be someone who has the time to monitor the rise and fall of your chosen securities so that you can act as soon as needed.
Benefits of Intraday Trading
The benefits of intraday trading are:
1. Ends the Overnight Risk
One of the major advantages of intraday is that it does not have any form of overnight risk. As, the trader has to close the position prior to the end of trading day, ensuring that the profitability remains unaltered by the events or movements that happen during this period. Thus, any stock market tragedy be it global or local will not be able to affect your profits of that particular day.
2. Provides Higher Returns
When the concept of intraday is combined with an effective trading strategy then you can witness amazing profits in a short span of time. But, again the key here lies in the kind of strategy that you develop along with the method used to implement it.
3. Quadruple Leverage
Another great benefit is that anyone with little capital can begin their day trading journey. In addition to that, there are several brokers that come up with a special quadruple leverage perk for seasoned brokers who have acquired millions or more in their registered trading accounts.
4. Great Opportunity to Learn
Undoubtedly, intraday offers an invaluable platform to learn, examine and apply various trading techniques in a short period, allowing you to test the strategies and then determine which one suits you the best.
At last, if you stay disciplined and trade using result-oriented intraday trading tips then you will definitely be rewarded with desirable returns
What are the requirements before starting intraday trading?
To place buy or sell orders as well as place your securities, you must have an active demat and trading account. A demat account will hold your individual securities whereas a trading account will allow you to place orders.
There are many tools that can help you analyze market trends, but they are not mandatory. You can rely on your analysis of market trends to make your transactions.
If you are looking to do intraday trading, there are some tips to help you trade successfully.
Conduct due diligence
There could be companies or brands that you personally like or companies that everyone in your social circle always trades in. However, it is important that you do not get bogged down by the sentiment of buying or selling a particular stock. Do your homework and trade stocks that align with your own interests. For example, if you work in the automobile industry, you may better understand the shares of an automobile company. You can buy some shares of that company and check its status in few days. Check to see if its stock prices are stable or fluctuate constantly. Also, check to see if the volume has changed significantly. You will have some questions and you need to understand their answers before venturing into intraday trading completely.
Identify stocks that move with the market
There are some stocks that move in the same direction as the indices. For example, if the Sensex is increasing points, then these stocks are also gaining. If the Sensex loses points, do so in these stocks. If you are looking for a safe bet, identify correlations and trade accordingly.
In addition to these 'safe stocks' there are 'chaotic' stocks which can move very rapidly in any direction, making them highly unpredictable. Unless you are feeling particularly adventurous, it is advisable not to trade in such stocks.
Every coin have two side .
7 reasons why intraday traders lose money in the stock markets.
Lack of trading discipline is the primary reason for intraday trading losses. Trading discipline has to focus on three things. Firstly, there must be a trading book to guide your daily trading
It is estimated that nearly 80-85% of intraday traders end up losing money in the stock markets. Normally, 70% of the intraday traders do not last beyond the first year and 90% do not last beyond the third year. What is the reason for this phenomenon and why do intraday traders lose money so consistently? There are 7 key reasons for the same.
Lack of trading discipline
This is the primary reason for intraday trading losses. Trading discipline has to focus on three things. Firstly, there must be a trading book to guide your daily trading. Secondly, you must always trade with a stop loss only. Thirdly, you need to keep booking profits at regular intervals. When any of these aspects of disciplined trading are compromised with, it leads to losses in intraday trading. Trading discipline is critical because as an intraday trader, your primary focus must be to protect your capital and limit your losses.
Too much panic in the market
One of the basic reasons traders lose money in intraday trading is due to panic. In the stock markets when you panic, you actually subsidize the other trader who does not panics. Profits always flow from the trader who panics to the trader who does not panic. When you panic in intraday trading, you tend to cut your positions too soon. You require a basic amount of risk appetite for intraday trading, but your risk should be properly managed. The key rule is not to panic just because the market is showing signs of volatility.
Trading against the market
For a long-term investor, taking a view against the market may be productive in the longer run. But if you are a trader, then you must ensure that you always stay on the side of the market. As Jesse Livermore, the legendary stock trader, rightly said, “In trading, there is no bull side and bear side; there is only the right side.” The right side for traders is the side of momentum. Always trade on the side of momentum and never try to outsmart the market. That is a recipe for losses in intraday trading.
No capital limits on trading
This is an essential part of your trading discipline, especially when you are trading intraday. You need to put limits on your maximum loss at various levels. Each trade must be accompanied by a stop loss. You must set limits for losses for every trading day. If the losses happen in the first hour, have the discipline to shut your trading terminal for the rest of the day. Have an overall capital loss limit where you will get back to the drawing board and revisit your entire trading strategy. This is your insurance against trading losses.
Trying for rapid loss recovery
This is a common problem among a lot of intraday traders. When they incur a loss, they either try to average their position or try to overtrade aggressively to recover that loss. This will only lead to more losses. When you incur a loss, it means the trade was wrong. When you average or overtrade, you are just being wrong twice. Losses are part of your trading process and that is why limits are set and adhered to judiciously.
Relying on trading tips
A big challenge for intraday traders is how to trade and what stocks to trade. While brokers do provide trading ideas to clients, quite often traders also rely on external sources for tips on trading. That is best avoided. The best way to trade intraday is to gradually master how to read charts and how to interpret news flows and trade on your own. It is a slow process but there is really no alternative to learning methodically and trading on your own.
Poor feedback loop
One of the key steps in intraday trading is to ensure that the feedback loop and the learning process are complete. Ideally, the intraday trader must maintain a trading diary that documents the trades, the justification for the trades and the review of trades each evening. This will work as a basic manual for the intraday trader’s continuous learning process.
Most intraday traders lose money because they do not get the small things right. Take care of the micros and the macros will take care on their own.