Day trading, which is also known as intraday trading, defines buying and selling shares on the same day to earn profits. In this article, you will come across a number of strategies and tips for intraday trading to make the most out of your intraday trading. When you place intraday orders on an intraday trading app for buying and selling shares, you benefit from the price movements on that particular day before the market hours end. Intraday traders target to earn quick short-term profits.
Intraday trading strategies and tips:
Due to the stock market’s high volatility, several traders lose money when performing intraday trading offline or on an online trading app. The traditional thumb rule for intraday trading is not to risk more than 2% of your capital on a single trade. Moreover, the risk of ignorance is higher than the market risk, especially for beginners. Let us acknowledge a few strategies that will help you gain profits while performing intraday trading.
- Choosing liquid stocks – intraday trading involves the buying and selling shares on a particular day before the market closes. However, enough liquidity in the market is required for the stock exchange to implement these orders. The first step for intraday trading is avoiding Small-Cap and Mid-Cap stocks that are not liquid enough. Otherwise, there stands a high probability that your order may not get executed. Liquidity is the most crucial criterion that must be looked at before you select a particular stock to trade in. Stocks with high liquidity trade and huge volumes allow intraday traders to easily buy and sell stocks of larger quantities. Moreover, avoid investing all your money in a single stock through a stock trading app. Experts advise diversifying your positions across several stocks as diversification helps balance your intra-day trade strategy, minimizing your risk.
- Freeze the entry-exit price – Several stock investors or traders suffer from the buyers’ fallacy. They become prey to misleading notions and fraud when trading through a trading app. This happens when the buyer imagines a second thought and doubts their capability. Suddenly, the trader feels this stock selection was not good enough while entering the trade position. To avoid such a trading mishappening, you must follow the second intraday strategy, deciding the entry and exit price, before taking a position. It ensures that you hold an objective view and know the levels at which you will buy or sell your trades. It would help strategically plan your entry and exit without letting emotions dictate your decisions.
- Setting a stop loss level – You must decide the level of loss you are ready to risk if the trade goes against your position. It acts as a safety rule, helping you minimize your losses. Several experts suggest this is the most important strategy for intraday trading. A stop Loss helps you manage your risk and should be followed by each trader as the name suggests that it helps you stop your losses.
- Book profits when the target is reached – the enemy of every intraday trader is greed. This is so because it takes only a few minutes for the market to switch sides. Especially when the market is very volatile. The secret to successful trading lies in the high margins and leverage that traders enjoy. Margins and leverage help to amplify profits and losses. However, once you attain a desirable stock price, do not wait for the price to rise even more, as the price may fall, and your greed result in your losses.
To become a successful intraday trader, you should be disciplined. If you’re just a beginner in intraday trading, do not try running towards the profits directly without knowing the trading and rules. Ensure you learn and understand the basics before buying and selling trades on any trading platform.
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