Intraday trading deals with buying and selling of stocks on the same day, during the trading hours that are stipulated by the exchange. Stocks are bought and sold in large numbers strategically with the intention of booking profits in a day.
What is intraday trading?Amit and Chirag, both trade in the equity share market. While Amit is an avid trader with Angel Broking, Chirag is a beginner and wants to know about intraday trading.
Intraday trading implies buying and selling securities on the same day.
Every day, the price of a security, say ABC Corp fluctuates. An intraday trader profits from this rise or drop of price which offers huge returns. Intraday traders also get the benefit of margin funding, whereby they can do transactions of up to ten times their account value which boosts their gains.
Intraday trading poses a risk of loss but there are measures to limit losses. Whenever Amit trades intraday, he monitors the market closely and seeks advice from Angel Broking team of experts. He also opts for stop loss which limits his losses to a minimum if any.
Like Amit, Chirag is now ready to trade intraday with Angel Broking.
How to Go About Intraday Trading
It is important to understand the fundamentals of intraday trading in order to make consistent profits. A good tip is to trade with the current market trend. If the market is falling, sell first and buy later, and vice versa. Make an intraday trade plan and stick to the plan. Set your desired profit and stop-loss limit. Do not be greedy. Instead, book your profits at regular intervals. Maintain stop-loss levels. It helps you to limit your loss if the market does not perform. Also, choose highly liquid shares and trade in a small number of shares at a time, if you are not a seasoned trader.
Basic Rules of Intraday Trading
An unexpected movement can wipe all your investment in a few minutes. Hence, it is important to keep in mind a few intraday trading basics while carrying out intraday trading. Do not trade in the first hour as the opening range is established during that time. The fluctuations of this range can help to identify the intraday trend. Move with the market trend as it allows potential for a greater profit if the trend continues. Another basic rule is to fix entry price and target levels. Set a stop-loss limit so that your losses will be curtailed if the share drops. Also, withdraw if your desired profits are met. Stick to your plan and carry trade in a disciplined manner.