Hey there! You seem like you’ve been around in the stock market scenario for quite some time now. If not, then don’t worry; after this article, intra-day trading will become clearer to you. Intra-day trading is generally carried out by seasoned investors who have a decent amount of experience and can understand the basic patterns of the stock market.
In this article, I will tell the readers a few tips on intraday trading. Even though at the end it’s all about your observation and skill, I will show you how to improve your observation skills and what strategies can be implemented to make that sweet profit.
What is Intra-day trading?
- When an investor buys and sells particular security on the same day, or more specifically in the same trading session, it is known as intra-day trading. Intra-day investors capitalize on small price movements and are well-funded. These guys go for highly liquid stocks and invest high amounts of money.
- These investors are well-updated and have a keen observation which helps them to earn good profits. Intra-day trading requires short-term trading strategies (a few of which I will cover later).
So, let us get on with it.
TIPS FOR INTRA-DAY TRADING
- PROPER STRATEGY:
One can only make profits in intra-day trading if he/she has a proper strategy for the investment decisions. There are a lot of strategies one can choose from, based on his/her understanding. Basic would be to analyze your financial aspects, i.e. how much can you invest and how much risk can you bear, what stock you want to invest in, and so on.
- BE UP TO DATE:
This is the most important tip I can give you when it comes to intra-day trading. Being up to date with the stock market makes you aware of the rumours and events taking place in the world and how those events will affect the stock market and its aftermath.
- PATIENCE:
Patience regarding short-term movements of prices. Don’t panic if the value goes down. If you have made a proper strategy and have chosen the stocks that work for you, you need not worry. Millions of people out there have the same requirements as you, and as long as they exist, you don’t need to worry about losing money. This is one of the most basic things which you learn in a good stock market course.
Also, another thing is to keep your cool. Do not trade in a bad state of mind as it may lead to some bad decisions, which will end up in you losing that bag. Do not let emotions control your decisions, EVER.
- HIGHLY LIQUID STOCKS:
Choose those stocks which are highly liquid and can be traded easily on the day market (Or else you will keep looking for the buyer and never book the profit). Also, pick 2-3 liquid stocks and trade with them instead of picking only one. This will help you reduce the risk factor, and even if you lose money on one stock, there are chances that you can recover those losses from the other stocks.
These were some tips on intra-day trading; now, let us check out some strategies used by intra-day traders.
- ENTRY AND TARGET PRICE
Before actually trading, determine your entry price level and your target price. Often, an investor sells the stock after a nominal increase in the price instead of exploiting it to the fullest. If you determine a target price, you have the edge over other investors.
- STOP LOSS
Stop-loss is a method by which an investor averts extra losses. What he/she does is sell a security if it reaches the target price, both loss and profit.
E.g.
Stock ‘A’ is $100. An investor wants to invest in it. He will put a stop loss at 15%. This means if the stock price falls or rises by 15%, the stock will be sold. So, if the stock drops to $85, goodbye; if it increases up to $115, bye-bye.
- BOOK YOUR PROFITS
Never forget to book the profits that you have earned. Please do not be greedy, intra-day trading is short-term trading, and it requires you to book your profits immediately after making them.
There are many other strategies that one can execute to get a good grasp on intra-day trading. But there is no better teacher than experience. I also suggest attending some great courses on the stock market by The Thought Tree. Get it directly from the experts.
