Intraday Trading – Tips and tricks you need to know

Intraday trading is not as simple as it appears. One needs years of experience to understand how it works. Intraday trading involves purchase and sale of stock within a single trading day. The investor purchases stocks in order to earn profits by harnessing stock indices movement as opposed to investment purposes, which is common in traditional stock trading. As such, fluctuations in the stocks’ price are harnessed in order to earn profits. In this type of share trading, the orders placed by investors are squared off before the trading day ends. Here are some intraday trading tips for new investors.

Create your wish-list by researching thoroughly: Intraday investors can create a wish-list of the various stocks they wish to invest in. This wish-list can feature 8 to 10 different size shares, but is it is important that you do thorough research about these before you begin trading. Apart from the performance of the stock in the last 52 weeks, you should be aware of corporate events like mergers, stock splits, bonus dates, dividend payments and so on. You should also be well-versed with all the technical aspects of the stocks on your wish-list. You may use the internet to research the resistance and support levels as it can prove highly beneficial.

Opt for two to three liquid shares: Another essential intraday trading tip involves squaring open positions before the trading session ends. Therefore, as an investor, it is in your best interest to select only two to three highly liquid large-cap shares. If you choose to invest in mid-size or even small-caps, you may have to hold your shares because of their low trading volumes.

Determine your entry and target prices before you place the order: If you are interested in day trading, you must also understand the importance of determining the entry and target prices before you place an order. This is attributed to the human factor; that you, as a trader, may change your mind after purchasing shares. Due to this psychology, you may end up selling stocks even if there is a nominal increase in the price. As an investor, this behaviour may cause you to lose the opportunity to benefit from higher gains because of increase in price.

Book your profits upon reaching your target: As investors, we are all tempted to push our luck when a stock is performing well. This fear and greed, which is common in intraday stock trading, can cause one to lose a lot of money. As such, one of the key intraday trading strategies involves booking profits as soon as you reach your target. Both, cutting losses and booking profits upon reaching the target is incredibly important. That said, if you feel that your stock has a better chance of rising in price, you must readjust the stop/loss trigger to match your expectation.

Don’t attempt to move against the market: Predicting market movements is out of the reach of even the most experienced professional. Even if the technical factor is depicting a bull market, there may be a decline. These indicative factors do not come with guarantees. If you find the market moving against your expectation, it is best to exit your position in order to avoid huge losses.

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Created on Sep 15th 2019 20:32. Viewed 523 times.

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