Beginner’s Guide for Intraday Trading
What Beginners Need to Know about Intraday Trading?
Intraday trading is different from delivery trading, in intraday trading is about buying and selling a stock on the same day such that the net position at the end of the day is zero. You can buy or sell the position or you can sell the stock, buy it back before the end of the day. Whatever the profits and losses in intraday trading they are credited and debited in your trading account the same day. However, it does not show in your Demat account. An individual gets 5 hours to earn a profit, every intraday transaction needs to be closed by the broker. If they miss out on it, they might result in losses. You can ask your broker to do that for you.
5 Things every Beginner must know about Intraday Trading
- Intraday trading entitles you to get higher leverage. It allows you to pay a small margin and take a larger open position. All you need is to ensure that you define your everyday trade into intraday at the time you are placing an order. If you define the stop loss and profit loss at the time of placing the order, you can get more benefits in the intraday trade.
- The intraday trade works both ways, you have to pay a margin of Rs. 10,000 and take a position of Rs. 70,000, your profit can thus multiply 7 times. At the same time, your loss can also be multiplied seven times. Hence stop losses are very important to be set in an intraday trade.
- As a trader, you need to ensure that any open position taken by you is closed out. if you have left it open your broker must automatically close all the open positions after 3 PM at the available price. Remember that if the broker is still not closing the position, you might incur a loss. Turn closing all the open accounts into discipline.
- Online share trading is not always going to be profitable. You will also make losses as much you are making profits. Since you are trading between 5 hours, you have to calculate that the price movement might not always be in your favor. You must understand that you are not making a high profit or major loss in a single day but over some time.
- To ensure that you are making no mistakes in decision making, learn to make charts, and do not depend on calls or tips. You must have good analytical reason to make any investment or sell the stock. A reading chart is necessary, simple charts are enough to enable you to trade profitably. You need not be an expert in the chart, all you need is to be familiar with how to interpret the charts.
How Beginners Should Go About Intraday Trading
Be double-sure each time you are investing in. Of course, you can never be 100% sure about intraday trade but there has to be a strong reason to invest in any stock. Here are 3 major points that you need to remember all the time:
- Start by trading a small amount and they increase your order size and your order book gradually. Be confident in your decision making and that can only be done by technically empowering your decision. If you risk too much then any reverses will make intraday trading unviable for you. start small and take a calculated risk and gradually scale up.
- Sticking to a custom-built strategy might help. Before you get into a trade, create a framework about the price which you will execute the trade, where you will put a stop loss, what is your profit target and how you must strictly adhere to it. Remember discipline is the key.
- It is about ensuring your losses are as small as possible. It is also referred to as a risk-return trade-off. In Intraday trading, it is always better that you cut your losses and quickly find a trade that is not going as you interpreted. In the end, we all learn from our past mistakes, make sure you learn from your mistakes.