Basics Of Intraday Trading


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Intraday trading is a type of trading where stocks are bought and sold within the same day. It’s different from traditional investing, which involves buying stocks and holding them for long-term gains. Intraday trading can be a great way to make money, but it also comes with risks. If you’re thinking of getting into intraday trading, it’s important to understand the basics before you start. In this blog post, we will cover the basics of intraday trading, including what it is, how to get started, and some things to watch out for.

What Is Intraday Trading?

Intraday trading is the term used to describe the buying and selling of securities within the same day. This type of trading requires a keen eye for opportunities and a quick response time in order to take advantage of them.

In order to be successful at intraday trading, one must have a strong understanding of market trends and indicators. They must also be able to make split-second decisions, as any delay could mean missing out on a lucrative opportunity.

Many people shy away from intraday trading as it can be quite risky. However, with proper risk management techniques in place, it can be a very profitable endeavour.

Advantages Of Intraday Trading

There are many advantages of intraday trading, which is why it has become so popular in recent years. Perhaps the most obvious benefit is that you can make a lot of money in a short space of time. If you trade wisely and carefully, it is possible to make a significant profit within just a few hours.

Another advantage is that you don’t have to tie up all your capital in one trade. With intraday trading, you can open and close trades quickly, so you only need to use as much money as you feel comfortable with. This means that you can take on more risk than if you were investing for the long term, but still limit your losses if things go wrong.

Finally, intraday trading gives you more flexibility than other types of trading. You can choose when to trade and for how long, so you can fit it around your other commitments.

Disadvantages Of Intraday Trading

Intraday trading can be very risky and stressful, as it involves trying to make a profit within a very short timeframe. This can often lead to impulsive decisions and overtrading, which can result in heavy losses.

Another disadvantage of intraday trading is that the markets can be very volatile, and prices can move very quickly. This means that there is a greater chance of making mistakes and losing money.

Finally, intraday trading requires a lot of discipline and focus. It is not for everyone, and if you are not willing to put in the work then it is probably best to avoid it altogether.

How To Do Intraday Trading?

Assuming you are asking about how to do intraday trading in India, here are the basics:

What is Intraday trading?

Intraday trading is buying and selling of stocks within the same day. The main motive behind intraday trading is to earn profits by taking advantage of small price changes in the market. In order to do intraday trading, a trader must have a good understanding of technical analysis, as it plays a major role in deciding when to buy or sell a stock.

Here are some basic steps that you need to follow for successful intraday trading:

1) Select a stock or shares for trading: You can’t trade without selecting a stock. So, the very first step is to select stocks that you want to trade in. For this, you need to have knowledge about various companies and sectors. It is advisable to select only those stocks in which you have complete faith and confidence.

2) Analyse the charts: Once you have selected the stocks, start analysing them using various technical indicators. This will help you understand the trends in the market and make better decisions while buying or selling stocks.

3) Decide on your target: Before entering any trade, you must have a clear target in mind, i.e., the price at which you want to exit the market. This will help you book profits and cut losses at an appropriate time.

4) Place your order: Now

Intraday Trading Indicators

Indicators are mathematical calculations based on the price, volume, or open interest of a security or contract. They are used to predict future market behavior and help traders make decisions about when to buy or sell a security.

There are many different types of indicators, but some of the most popular ones used in intraday trading include moving averages, relative strength index (RSI), and Bollinger Bands®.

Moving averages show the average price of a security over a certain period of time. They can be used to identify trends and support and resistance levels. The most common timeframes for moving averages are 20-day, 50-day, 100-day, and 200-day.

The RSI is a momentum indicator that measures whether a security is overbought or oversold. It uses a scale from 0 to 100. A reading above 70 indicates that a security is overbought, while a reading below 30 indicates that it is oversold.

Bollinger Bands® are technical analysis tools that were created by John Bollinger in the early 1980s. They consist of an upper band, a lower band, and a simple moving average in the middle. The bands expand when volatility increases and contract when it decreases.

Intraday and Delivery Trading

Intraday trading is the buying and selling of stocks within the same day. Delivery trading, on the other hand, involves the buying and selling of stocks with the intent to hold the stock for more than one day.

There are a few key differences between intraday and delivery trading that investors should be aware of. For one, intraday trading is generally done by day traders who specialize in taking advantage of short-term price movements. On the other hand, delivery trading is often done by long-term investors who are looking to buy and hold a stock for an extended period of time.

Another key difference is that intraday traders typically use margin accounts which allow them to borrow money from their broker to trade with. This can magnify profits or losses if the trade goes against them. Delivery traders, on the other hand, generally don’t use margin accounts and instead pay for their entire position up front.

Finally, intraday traders need to be aware of the risk of being “bought in” at the end of the day if they haven’t been able to sell their position. This happens when the price of a stock drops below the price at which they bought it during the day and their broker forces them to buy it at that lower price. Delivery traders don’t have to worry about this as they can simply hold onto their position until they’re ready to sell.

How to Select Intraday Trading Stocks

When it comes to intraday trading, the key is to select stocks that are highly liquid and have tight bid-ask spreads. Liquidity is important because it allows you to enter and exit trades quickly and at a fair price. Tight bid-ask spreads help to ensure that you don’t pay too much in commissions.

There are a number of ways to find stocks that meet these criteria. One is to use a stock screener that filters for both liquidity and tight bid-ask spreads. Another option is to look at the most active stocks on the day, which are usually those with the highest liquidity.

Once you’ve found a few potential candidates, it’s important to do your own research before making any trades. This includes looking at the company’s financials, news stories, and any other relevant information. By doing your homework, you can help to minimize your risk and give yourself a better chance of success.

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