What is intraday trading?
Intraday trading, in simple words, in buying today and selling today. Buying and selling have to occur within one trading session on the same day.
Intraday trading is a form of ultra-short-term trading technique that requires the trader to buy and sell securities or other financial instruments on the same day. Intraday trading involves squaring off all the open positions before the closure of the market on the day the securities are bought. Intraday trading doesn’t involve any change in the ownership of the securities. Intraday trading was largely a domain of financial companies and professional traders, but with the advent of electronic and margin trading, even novice investors can opt for intraday trading.
More information on Intraday Trading:
Intraday trading is all about opting and closing the trade on the same day. When you get into a lower timeframe, the risk always increases so is the reward.
You should know when to leave the desk in case of no opportunities.
Timing for Intraday Trading
Intraday traders are advised to avoid trade during the first hour and last hour of market as it will be more volatile during this time, it may happen that you can get better opportunity later on. Try to trade when market is stable as it’s a day trading you have to exit position at the end of the day so it has to be placed at right time.
When to place target and what should be stop loss.
After execution of your trade immediately you have to place target for profit after looking at the support and resistance levels. Be firm on your decision and don’t be greedy for more profits. Same way place stop loss to reduce the potential risk on your position. Risk-reward ratio should be 3:1 which is beneficial for earning profits.
How to measure resistance and support levels.
Opening range is consider for calculating resistance and support. Stocks are fluctuating within a range of the trading session which is initial 30 minutes. Highest and lowest prices of this opening range are assumed as resistance and support levels.
Exit positions in unfavorable condition.
Sometimes market starts falling in that case instead of waiting for stop loss exit that position immediately. If you are monitoring market continuously then only you will be able to identify market conditions.
Demand & Supply balance.
In market analysis has to be done for demand and supply of stocks. If demand is less and supply is in excess then prices will impact and it will fall, if demand is high and supply is less then prices are likely to be increase. Based on this you will be able to understand when to enter in the market.
Avoid penny stocks.
Small investors should avoid trading in penny stocks as market capital is low so it can be easily manipulated by operators.
Selection of stocks for Intraday Trading.
Select liquid stocks only, volatility should be medium to high and it should have maximum group followers. Leverage is a two-edged sword. It will increase your profits if you are on the right trade and also your losses if you are on the wrong one.
THINGS TO DO IN INTRADAY TRADING.
1. Always trade with the trend.
2. Always calculate your risk-reward ratio before entering the trade and try to maximize reward relative to risk.
3. Trade your plan, your system, your signals, the chart and price action, and not your opinions, bias, or predictions.
4. Before placing an order, always remember this chart, and if all the situations are justified, then place the order.
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