Are you interested in intra-day trading? Here are some tips to get you started

Most new investors find intraday trading incredibly interesting and fascinating. There is something exciting about entering the market in the morning and taking home good profits when the market closes at the end of the day. That said, conducting intraday trades is not as easy as experts make it appear. You need to acquaint yourself with different intraday trading strategies and learn the tricks of the trade. If you are a beginner, here are some tips to get you started.

The most basic tip for trading intraday is to begin small, even if you have a decent corpus to conduct your trades. Let’s say you wish to allocate ₹300,000 to trading. Now, when you begin, you must allocate only 10% of your entire day-trading budget i.e. ₹30,000. Try to understand how trading works and get practical experience before you allocate more sums to trading. Once you begin to earn profits, you will gain the necessary confidence and you can eventually increase your risk appetite. Increase your positions slowly and gradually after you feel confident and comfortable enough to take and manage risks.

If you ask any experts for intraday trading tips, they will tell you that you should refrain from investing in too many stocks when you are just getting acquainted with how trading works. Investing in more than 5-10 stocks at the beginning does not make practical sense. Remember that you need to keep track of charts, volumes, supports, resistance, levels and news flows and so on and so forth. This can seem challenging, intimidating and impossible if you’ve invested in more than 10 stocks. Limit your early investments and stick to liquid stocks showing clear chart patterns as well as price reactions. Tracking momentum is important and you shouldn’t ignore the fundamental and technical aspects of trading.

Protecting your capital is incredibly essential. Whether you are a new investor or a seasoned one, you must set your capital loss limits from the very beginning and this limit should be set at three levels. Firstly, you need to determine clearly how much you can risk losing in day trading and immediately close your position when you arrive at that point. Secondly, you must determine the maximum amount of losses you can afford to incur in a day. Once you reach the maximum loss, you should simply call it a day and shut down your trading terminal. And finally, you must determine the limit on the overall depletion of capital that you can handle. Once you reach this point, you need to go back to your drawing board and begin reviewing you trading strategy.

When it comes to intraday trading, you should always try to stay with the momentum. If you notice the market moving in the opposite direction of your expectations, you should get the message. As an intra-day trader, you need to read the signs and modify your strategies accordingly. As such, you should avoid averaging positions. Remember, it is always better to go along with momentum instead of confronting it. Don’t let your personal views get in the way of profits.

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