How To Make Profit in Intraday Trading?
If you have even a basic knowledge of the Stock market, and the knowledge is working for you, resulting in huge profits. Then you can easily do intraday trading in your own way. But as per the experts in the stock market, intraday is not just selling and buying a particular stock.
It’s more about the methods of selecting a stock and making huge profits from it. However, one may also face subsequent losses in the intraday too, but with the right strategy, you can minimize these losses.
What Is Intraday Trading
Intraday trading is the process of buying and selling one or multiple stocks on the same day. In other words, we can say that in intraday trading, all the positions of stocks are resolved before the market closes on that day. This does not affect the holding of the shares, as any changes happening in the day get resolved on that day itself.
Let’s understand this with an example of day trading online in India.
Say a trader holds a stock of existing value INR 100. On the same day, the trader places a sell order at 104 with a stop-loss order to the stockbroker for selling a holding stock for INR 98. If the price of stock comes down to INR 98 or even less than it, the stop-loss order immediately gets executed, and the stock gets sold on the last price limit set, i.e., INR 98. And if the price hits 104, the stock will be sold at a profit.
Tips To Make Profit in Intraday Trading
It is only a myth that by doing intraday trading, one can become rich overnight. Intraday trading is very risky, and if you do not place your stock order intelligently, you will end up with huge losses.
If you are a beginner and want to learn intraday trading, you must go through the following tips.
Research To Select the Stock
Most people who lose their huge amounts in intraday trading are the ones who do not thoroughly study and analyze the stocks. But the essential feature of successful intraday traders is they read the market and stocks very carefully. That is why you must keep regular updates on both domestic and global markets. You should ensure to read about companies whose stocks you are planning to buy.
If you are trading a bulk of stocks, the most appropriate stock is the one that has liquidity of a high degree. As intraday trading works on precise timing and speed, stock of high degree volume will be the best option. Choose the stock of medium and high volatility so that it can move up to 3 to 4 percent in a day.
If you don’t have time to take lengthy courses on how to make profit in intraday trading, you can follow this tip. There will be a situation when you will find that the price of stock or share will increase more and more.
In such a case, avoid these thoughts and do not fall into such mind traps. But if you truly think that a certain stock price is going to increase, then set a stop loss and book the profit so that you do not face any loss. This type of strategy helps traders to trade within a day successfully.
During intraday trading, the stock price will either fall or rise, and your selected stock doesn’t need to make a profit every time. Sometimes, it happens that even a best-selected stock falls and gives you huge losses. So, it is very important to make proper strategies. Make a strategy to trade in the high margin and leverage. This way, your profit will increase.
But if you get your target, always remember not to become desirous. Moreover, plan everything when to exit at what price and accept the ratio 3:1 as an ideal ratio. This strategy indicates if you are taking risk of 1 percent, you must get the reward of 3 percent, and at that point, stop loss will be placed to prevent any further loss.
These were the tips that are used by beginners as well as experts to make a profit in intraday trading.