Top 5 Tips to Follow for Intraday Trading

The Curious Case of Intraday Trading: Riding the Waves in the Market within a Single Day

The Day Trader's Thrill Ride: Imagine getting onto a rollercoaster that starts and ends before the sun has set. That is what intraday trading is – a high-powered trading style where you sell and buy stock within one day. Definitely, not for faint hearts.

The Pulse of Intraday Trading: Numbers That Will Shock You

The Buzz of Bombay: Intraday Trading in India's Stock Market

Hold onto your chai, because the world of intraday trading in India is a rollercoaster of eye-popping numbers. The National Stock Exchange (NSE), India's largest, sees an average daily turnover of over ₹25,000 crore in the equity segment alone. That's enough to buy over 30 million smartphones every single day!

But here's the kicker: despite over 3.5 crore retail investors in India, only about 1% are active intraday traders. These brave souls contribute to nearly 75% of the daily trading volume. Talk about punching above your weight! The BSE Sensex, India's benchmark index, can swing by hundreds of points in a single day, creating heart-stopping opportunities for quick profits.

In fact, during major market events, intraday trading volume can spike by over 50%. And here's a surprising stat: the average age of an Indian day trader is just 28 years old. With the rise of discount brokers and mobile trading apps, the number of day traders in India grew by a staggering 50% in 2020 alone. Intraday trading is becoming the new national pastime!

What Makes Intraday Trading Unique?

1. All positions close before the market does.
2. You're after quick wins from small price moves.
3. Full-time investment during market hours.
4. Traders often use borrowed money to boost potential gains.

How Does Intraday Trading Compare?

Vs. Long-term Investing:

- Intraday is like fast food; long-term investing is slow-roasting.

- Intraday's riskier but potentially more exciting and more returns

- Long-term investing aims for bigger gains over time.

Vs. Swing Trading:

- Intraday traders watch minute-by-minute action; swing traders check in daily or weekly.

- Intraday demands more of your time and attention. During Market Hours it's a full-time job.

Vs. Scalping:

- Intraday traders enter and exit a position several times during the day; scalpers do it tons of times.

- Intraday trading is fast-paced; scalping is like trading on steroids.

Ready to Try Day Trading? Here's Your Starter Pack

5 Essential Intraday Trading Tips for Success

1. Turn Yourself into a Market Whiz

Before setting off the trade:

- Know the market trends inside out.

- Financial news should be at your fingertips.

- Get to know how different industries react to events.

The more you know, the better you will be able to trade. So, start your day off right by going through overnight news and market forecasts. Then, as live trading hours are going on, keep an eye on real-time news feeds. Remember, in intraday trading, information is gold.

2. Set Your Limits and Stick to Them

Intraday trading can be an emotional ride. Ground yourself with the following:

-Set your profit goals before entering the market.

-Know in advance how much you are willing to lose.

Letting your fear or greed dictate your actions needs to be avoided. A game plan will prevent you from acting on impulses. For instance, set a daily target of profit and a limit on loss. If any one of these two reaches, pack up and go home.

These types of disciplines can save you from the temptation of overtrading or chasing losses.

3. Master the Game of Technical Analysis

Charts are the crystal ball of intraday traders. Feel comfortable with charts by learning the different chart patterns. Thoroughly understand head and shoulders and double tops chart patterns. Look for key indicators, moving averages, RSI, MACD, etc. Also, practice spotting support and resistance levels.

Good chart skills can help you find better entry and exit points. Use the simplest tools like trend lines and moving averages. As you gain confidence, you can add more complex indicators as you start getting the hang of it.

Remember, the goal is to spot possible price movements before these movements take place.

4. Risk Management is Your Best Friend

Job number one is not losing your capital. Here's how:

-Never risk more than 1-2% of your trading capital on any one trade.

-Use stop-loss orders to limit the potential losses.

-Do not try to make good losses by trading more or bigger.

Remember, if you blow all your cash, you can't trade! If you have 100,000 to trade, for example, the 1% rule would mean you should not risk more than 10,000 on a single trade. In such a case, even a string of losses will not cost you much.

5. Keep a Trading Journal

If you track your trades, then you'll learn from them. Note why you entered and exited the trade. Note how you felt during the trade.

-Look for trends in your P/Ls.

You can keep a journal to help you identify and correct mistakes. For instance, you realize you always need to pay more attention to a trend. Or maybe you're the type of person who holds onto losing trades way too long than necessary. These moments are gold mines to your trading strategy.

Wrapping It Up

Intraday trading, though an exciting game, certainly is not for the faint heart. Much discipline, expertise, and a very good game plan are required in it. Following these tips and learning day after day will help you ride through the ups and downs of day trading.

Remember, Rome wasn't built in a day, neither is a successful trading career. Be patient, focused, and keep learning. You can build those skills for moving very fast with the intraday world of trading. Happy trading, and may the odds be ever in your favor!

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