If you are searching for Intraday Trading Techniques or best intraday trading strategy which is most successful then this is the one stop solution for your search.
Because in this article I have did thorough research and experienced practically by doing this.
When you experience by your own then there may be some situation where you can incur any losses but believe me, that will be a peanut for you. Because at last market is unpredictable at any time.
Intraday Trading Techniques
Before going to the detailed article I may tell you that, Intraday Trading is the extremely difficult that a layman can’t handle it. Only professionals can handle it because they avoid those mistakes which layman does. And also capital intensive professionals use high technological subscription based analytical and news tools which gives them the more appropriate direction of the market momements.
So, do not worry if you are new in this field. I can not give you high percentage of profits but at the initial phase you can minimize your losses by maintaining regularity in profits.
What needs for doing Intraday Trading?
If you want to trade in Intraday there are some elements you must have. Those are essential for doing it. Without those elements you can not or should not enter into the Intraday Trading. Those elements are given as below.
Time is the Main element for Trading. If you can’t give enough time for research or placing orders or managing your positions then all the things are waste for you. Unless you have a good broker which provides you a good software terminal or order types specialised for Intraday Trading.
We recommend Upstox.
Knowldge about Market
Unless you have basic knowledge about stock market such as Large Capital (Large Cap) companies, Indian Major Indices of Stock Market and their companies, various order types which used for different purposes such as Market, Limit, SL-Limit, SL-Market, OCO, CO then it will be hard to earn profits from the market by doing Intraday.
Required Capital to Manage Positions
I will give you one example to explain this point easily.
When a pilot trainee at his training period, the trainor orders him to take his flight above the clouds because if he can not control flight then he have some scope to recover the flight.
But if he is not taking his flight above the cloud and just trying to fly near the ground level it will become very hard to control and it will definitely increase the risk of crashing the plane.
So, if you are taking the capital very less and putting big trades with utilizing complete money in your trading account then you are crashing your capital when you made any decision wrong.
So, taking large capital (manageable is important) and putting small trades without utilizing more than 15% of total capital is the wise decision of playing safe in Intraday Trading.
How to Select Stocks for Intraday Trading
Rule 1 – Liquidity
Liquid stocks have big volume (trader’s participation), whereby larger quantities can be purchased and sold without affecting the price significantly. Since intraday trading strategies depend on pace (speed) you have and preciseness (accuracy) of timing, a lot of volume makes getting into and out of trades easier. Depth is also critical, which shows you how much liquidity a stock has at various price levels above or below the current market bid and ask (offer) price.
Rule 2 – Volatility
Intraday traders require movement in price in order to make money. Day traders can choose shares (stocks) that tend to move a lot in price terms or in percentage, as these two filters will often produce different results. Shares which move 3% or more per day have consistent large intraday moves to trade. The same is true for stocks that tend to move more than Rs. 5 to 10 per day.
Rule 3 – Group Followers
While there are those who specialize in intaday plays, most intraday traders look for shares (companies) that move in correlation with their sector and index group that means other companies which have similar business. This means that, when the index or the sector goes upward, then the individual stock’s price also increases. This is important if the intraday trader wants to be trading the strongest or weakest stocks each day.
But, If a trader is looking to trade the same stock every day, it is wise to focus on that one stock, and there is no need to worry about whether it is correlated with anything else. Technically it is called as “Mastering of a Stock”.
Entry and Exit
Before placing the entry order (Whether Long/Buying or Short/Selling), you must determine and decide early what will be your Price at Profit and Loss too.
Because if you fails to plan then you are planing to Fail. This applies to Intraday Trading too.
Because a common person think that if the Share is going up in profit then he becomes greedy and do not book his profits which are already coming in hands and end up losing into the stock.
And when the stock is giving losses then he do not close his positions by taking minimum loss. Because he becomes optimistic at that situation and thinks that the market is going to reverse and he will definitely earn profit.
But, when the timing is about to end and he feels that there is no chance of earning anymore then he exit by making a huge loss.
Mistakes made by a Trader
Do not Manage their Holding Portfolio
Many traders take intraday trading so seriously that they do not maintain their long term holding portfolios.
If some are having stocks for holding then those are highly risky or penny stocks which may die in future.
I recommend that every trader should consult a good Financial Planner to maintain their long term Holding Portfolios which will surely pay you dividends in your retirements. CPA (Certified Financial Planner) will do it for you.
And with concerned to the Intraday Trading, this is good until you follow the rules and have control on your emotions.
But if you don’t manage your long term portfolio you will lose your control.
Please do not forget my words.
Do not withdraw half profits to their bank account
Firstly ask yourself, what is the purpose of trading if you are not withdrawing half of the winning funds to your bank account for family purpose and rest for reinvesting for trading or long term investing.
If you are not withdrawing then all the profits may go in future and you will end up earning nothing.
So, if you can earn money from market then it is good to withdraw some money to bank account.
Become Highly Optimistic
I have met many intraday traders who tell that to convert their intraday positions to the delivery so that profit will increase or loss will recover. But I say this conversion practice is just a bull shit.
Because you never know what will happen in the market. If you are not closing your positions in the same day then you are prone to the higher risk because market may open up after making a huge gap that will spoil all your thoughts and expectations about the market earnings.
And finally all the earlier income will vanish out.
So, it is highly advisable to close the positions in the same day if you have bought it for intraday purpose.
Otherwise you will repent hugely at some day.
Moving against the market
If you are trading against the market trend then you will never succeed in intraday trading.
If the trend if clearly positive and going uptrend then you should watch the stock for a pullback to buy stock at a cheaper rate.
And if the stock is clearly showing a downtrend then enter for selling only at a dearer price.
But do not look for selling if the market is in uptrend and vice versa to buy a stock which is falling downside.
But this rule has one exception that if the stock is showing clear trend reversal with moving average and price chart then you can take reverse positions to earn good profit.
Because when the trend reverse to go down from uptrend and go up from downtrend the speed gets increased and we get high potential of profits.
Researching watchlist thoroughly
Intraday Traders are advised to include eight to ten shares in their wish lists and research those in depth. Know about its corporate events, such as mergers, bonus dates, stock splits, dividend payments amount, etc., along with their technical levels which is higly is important. Finding the resistance and support levels of the stock will also be beneficial.