Intraday Trading – The Basics of Day Trading

To achieve short-term goals, a trader on the stock market can either buy or sell shares in the secondary market. The share price fluctuates with the market. To make profits, traders capitalize on market volatility. Trading can also lead to losses. Intraday trading is simply buying and selling shares in a single day. Before you trade, it is important to understand what intraday trading means. Let's now learn about intraday trading.

Intraday trading can be profitable, but it is also risky. You must square off your position by 3.10pm. This means that if you've bought stock in a certain amount, you need to sell it. If you've sold stock in a certain amount, you will need to purchase it. Your position will automatically be squared if you don't do so. To make the right buying or selling decision, technical charts are based on a variety of time intervals such as 1, 5, 15, 30, and 60 minutes. Before you start trading intraday, it is important to know your risk appetite. Trader must keep an eye on the stock market to avoid losing capital. There are many strategies you can use to minimize loss. Stop loss strategy is one of them. This allows you to set a price at which the stock can be sold off if it falls below this level.

Important points to remember about intraday trading

Choose stocks that are easy for you to sell. (High liquidity).

You should choose a stock with high liquidity. Only then can you sell your stock at any time. You could lose your stock if there aren't buyers. When you choose a stock to trade intraday, this is an important consideration.

Choose stocks that have high trading volume:

Stocks with high trading volumes simply indicate that more traders are interested in them and you can easily sell or purchase these stocks.

Keep up-to-date with stock market news

Markets are volatile and you need to be aware of the current market conditions. Otherwise, you could lose your investment. Make it a habit to read about stocks and the markets regularly.

Ask an expert:

Market experts can help you clarify your decision if you're not sure. Don't rely on rumors to make your decision.

Stop loss strategy

Stop loss is a great strategy to avoid losses when there is a lot of volatility. This strategy will limit your losses. If you are concerned that the stock price will plunge below 100, then you can set 98 as your stop loss. This means that your stock will be sold or bought when it reaches 98, reducing your loss. Your loss will be greater if you don't use stop loss, and the price plummets further to 85.

Before you trade, do some analysis.

Before you trade a stock, it must be thoroughly analyzed both on a technical and fundamental level. Trading is a complex process that requires research.

Do not trade in penny stocks

Penny stocks, which are highly volatile and have low liquidity, trade at very low prices. They also see high fluctuations. They are also high-risk investments. These stocks are not recommended for trading.

Emotions are a key factor in making decisions. As a trader, you need to be able control your emotions of fear and loss. Greediness can also cause you to lose money.

Select stocks that are sensitive for news:

Intraday trading is based on the principle that expectation and reality are compatible. Let's take an example to show you what intraday trading is. The quarterly results of company A are expected to be good so you expect the stock price to rise. Stock A is bought at 9.40 in the morning. The quarterly results match your expectations. This causes the stock to rise. You can also sell the stock at 3.10pm on the same day to make profit.

Before you can trade stocks, it is important to understand the definition of intraday trading. This article will help you understand what intraday trading is.