The Best Intraday Trading Tips You Should Know
Intraday trading involves buying and selling equity shares on the same day to earn profits. It is also known as day trading. When you place an intraday order, you intend to benefit from the price movements on that trading day and square of your position before the close of business hours. There is no plan to take delivery of shares. Here we discuss a few intraday trading tips to help you earn profits.
- Pick liquid stocks.
As intraday trading involves completing the transaction on the same day, you should pick liquid stocks. If you choose a stock that is not traded frequently and there are not enough buyers or sellers in the market, you will not be able to square off your open position.
Picking the right stocks is crucial when it comes to day trading. Focus on large-cap stocks to avoid a situation where the squaring-off order is not executed, and you are compelled to take delivery.
- Do not forget to diversify.
Diversification is an integral part of successful intraday trading strategies. Do not invest all your funds in one or two stocks. Diversify your position across a few scrips to balance your intraday portfolio and spread your risk.
- Adding stop-loss is a must!
If you buy a stock expecting it to go up, but instead, it goes down, then you should have a stop-loss level for yourself to contain your losses. You should decide on a price you will square off if the scrip moves against your expectations.
If you are a beginner, you could use the 3:1 tip. This tip implies you set the stop-loss at three times lower than the cost, at which you would have completed the transaction to book profits.
- Do not get greedy!
One of the best intraday trading tips is to avoid being greedy. Earning profits in intraday trading relies on the price movement during the day. The gains can quickly turn to losses, sometimes within minutes in a volatile market. If the price is going up, you should book profits as soon as you reach your target price. Do not get greedy and wait for it to increase further, as that might not happen.
- Close your open positions.
Another tip to follow for intraday trading is to close all your open positions. Sometimes you may be tempted to take the delivery of shares if the shares do not reach your target price. As you buy the stocks for intraday trading based on technical analysis, they may not be suitable for long-term investment. If you are keen to convert an open position to delivery, look at the company fundamentals before making a decision.
- Don’t go against the trend.
It is almost impossible to predict stock market movements accurately. You may design your intraday trading strategies after careful thought and research. However, the market may move in the opposite direction. In such a situation, rather than challenging the market and sticking to your analysis, it is better to follow the market cues. Remember, if the market is not supporting your analysis, you should try to contain your losses and exit.
Intraday trading comes with an element of risk. The right strategies can help you minimise your risks and make well-informed decisions. Choosing a platform like Asthatrade that combines extensive industry experience with cutting-edge technology can make your trading experience effortless and more profitable.