Intraday trading refers to buying and selling stocks on the same day. In this type of trading, stocks are purchased to earn profits by leveraging the movement of the stock indices. However, intraday trading requires a cautious approach and this blog will list some tips that can help you in the exercise. Let’s get started.

  1. Thorough research
  2. To maximise gains from intraday trading, you must equip yourself with the requisite knowledge. You should be aware of the market terminologies, know how to place trade orders, and, most importantly, pick up the right stocks.

    There are many materials available online reading which can help you in the exercise. At the same time, many brokerage houses offer courses of intraday trading, enrolling in which can help you know the nitty-gritty.

  3. Formulate a trading strategy
  4. Once you arm yourself with the requisite knowledge, it’s vital to create a trading strategy. Basically, there are two approaches that you can opt for – discretionary and systematic.

    In the discretionary approach, decisions are made based on current factors, while the systematic method looks out for specific signals for buying and selling. Also, known as rule-based trading, a systematic trading method involves back-testing using historical data.

  5. Cut out emotions
  6. Emotions can be a spoiler in intraday trading. Logic and not emotions should back your trading strategy. Since you have only a day to buy and sell, make sure you opt for fundamentally sound stocks that can turn out to be profitable.

    It’s in your interest to avoid the herd mentality as this can result in losses. Also, as time is limited, make sure to block market noises and trade with your knowledge.

  7. Avoid lump sum investments
  8. Experts generally advise against making lump sum investments, particularly if you are new into intraday trading. Financial prudence calls for testing waters before taking a plunge.
    Hence, it’s advisable to trade with a small amount, see how it goes and then make further decisions. Loss of a big amount can hurt your finances and impinge critical life goals.

  9. Adopt a practical approach
  10. Intraday stocks move on market sentiments and hence, you need to adopt a practical approach. If the markets are bullish, you can buy and sell a few times within the day instead of waiting for a big move. On the other hand, if they are in a bearish mode, you can short sell and purchase at lower levels to make small gains.

The final word

Mastering intraday trading requires patience and discipline. Constant involvement will help you learn the tricks in the long run.

Click here to open an online trading and demat account.

DISCLAIMER

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.



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