Intraday trading is considered as quite riskier than other trading strategies as it involves buying and selling of stocks on the very same day. This is because, in intraday trading, a large number of stocks are bought and sold with the intention of booking profit. Here, the objective is plain and simple: to buy and sell shares within the same day. Before we begin, let’s understand what exactly is Intraday trading and what are the strategies investors need to apply while intraday trading.
Strategies for Intraday Trading
Needless to say, intraday trading means purchasing and selling of stocks on the very same day. However, with intraday trading, traders can short sell their shares and then buy back during the rolling settlement period. Experienced traders always recommend selecting the shares which are highly liquid.
Find Entry and Target Price
It is important to determine the entry-level and target price before placing the buy order. It’s quite understandable for a person’s psychology to change post buying of shares. Hence, many traders may sell shares even if the price experiences high growth. As a result, they may lose the best chance of achieving gains because the price goes upward.
Utilizing Stop Loss for Lower Impact
Stop loss is defined as an advanced order placed with the assistance of a broker to buy or sell a specific stock once it reaches a price point. It is generally used to restrict the loss or gain in a trade. This is beneficial in limiting the potential loss for investors due to downfall in a stock.
Stop-loss also works great in short selling. Investors who short sell their shares, stop loss acts a boon by minimizing the losses if the price goes up beyond their expectations.
Book Your Profits Once You Achieve Your Target
There is a famous quote saying “ As long as greed is stronger than compassion, there will always be suffering”. Many investors suffer from greed or fear in terms of high earning. With the help of stop-loss, investors not only minimize their losses but also book their profits once the target is achieved.
Research Your Wish List Frequently
Successful traders advised to include 10-12 shares in their wish-list and research all the stocks in depth. For instance, do fundamental analysis and technical analysis of stock and try to understand the trend such as the history of a stock, merger, present return and more.
Don’t Move Against the Market
Experienced professionals fail to predict the exact market movement. There are many times when all the technical indicators depict a bull market; there is still a decline. However, these factors do not provide any guarantee. If the market does not move according to your expectation, then it is important to exit your position to avoid huge losses.