Intraday Trading Guide

When you are into intraday trading, you need to extra cautious about your decision making. You cannot blindly make choices and you have a limited trading window to earn a profit that is 5 hours. Sensing all these difficult factors one needs to have good knowledge about market volatility of any intraday trading stock and need to divide these 5 crucial hours well to manage to reach the profit level. The first hour and the last hours are the most difficult once. One cannot be more cautious when it comes to trading in these two segments. Since you need to protect your capital, you must take smart risks and should be taken in the form of a stop loss. The intraday trading guide here provides you a framework by which you can operate to defy the various factors and get profits as much as a stock offer. The key to having successful day trading in intraday is managing risk and process. 


Framework for an intraday trading guide

  • Selection of Stocks: Let’s begin with the very start, you need to be very cautious while you select any stock that is liquid and has a low risk entailed to it for losing the principal amount. If a stock is too volatile, it can trigger stop losses. If the stock is the low beta stock that is highly influenced by the market trends or any news chances of price movement intraday are quite low. Focus, therefore, should be selecting stocks that give movement and are predictable. 


  • The time you enter and exit matters a lot in intraday trading: When you are trading with Rs. 5 stop loss and Rs. 12 profit targets, even if you improve the timing by Rs. 2 it makes a huge difference on your profitability in the intraday trade. Make sumptuous use charts and news flow to get maximum benefit at different trading levels. 


  • Setting levels: Setting stop losses and profit targets well in advance and applying them to materialize your profit expectation is very important. Make sure you have applied them in the initial stage of the trade. More importantly, you must follow the stop losses and profit targets, you should turn the practice in the discipline. Also, avoid the practice of averagely positioning your stop losses. Also, when you reach profit targets, you must not think about getting more profit. It can put you in trouble. 


  • Side Momentum: Trade on the side of the momentum. This is needed to be repeated from time to time and always remember. You must learn to understand the wave of the market and where it is going. Learn to take a good guess on underlying momentum and trade within the limits. 


  • Maintaining the Good Record: You must maintain a trading diary. It is very important for profitability and cannot be ignored at any cost. It helps you in monitoring the stock based on the charts and news. The diary can help you in keeping a record on your trades and evaluate your decisions.


The significance of trading book and trade diary 

The best way to build your trading record is by trading gradually and building a trading book and diary. Here is how you can do it: 

  • The trading book is very important while investing in intraday. It guides you on trading and helps you define the maximum loss levels, risk rewards ratio and trade-offs, factors to take into consideration and what were your past decisions that ended in loss. 
  • The trading diary should hold the analytical records and evaluation of your trades. It efficiently records positions and logic. It does an EOD evaluation and provides you information on right and wrong decisions. It is a key learning guide works as an extension to your trading book.  
  • If you want the trading book and trading diary to help you in trading you need to be very transparent while keeping the log. The better you make the notes, you will have detailed information on the mistakes that you have made and should avoid further in intraday trading.