Intraday traders experience higher volatility than long-term investors. However, with the right knowledge, you can make the most of your intraday trading money.
Many seek trading tips for intraday to improve their chances of success. However, we suggest opting for intraday recommendations, not trading tips for intraday. That’s because what you need is a strong intraday trading strategy, not merely tips for intraday trading.
1. Choose liquid stocks
As you know by now, intraday trading involves buying and selling a set of shares on the same day before market closing, i.e., squaring off open positions. However, for the exchange to execute these orders, there has to be enough liquidity in the market. Thus the first tip of the free intraday tips for today is to avoid small-cap and mid-cap stocks that may not be liquid enough. Otherwise, your squaring off order may not get executed, forcing you to take delivery instead.
Further, avoid investing all your trading money in a single stock. Experts recommend diversifying your intraday positions across a handful of stocks. This can help balance your intraday trade strategy and minimize your risk.
2. Freeze the entry and exit price
Many stock investors and traders suffer from buyer’s fallacy. This is when the buyer immediately has a change of mind after purchase. The buyer suddenly feels that the selection was not as good as s/he believed at the time of purchase. As a result, they may take a wrong decision once they have bought a stock. All you need to do to avoid such mistakes is to follow the second free intraday tip – To decide the entry and exit price before taking a position. This ensures that you have an objective view.
3. Always set a stop-loss level
It is quite possible that the share you chose falls on the day you trade instead of rising. Therefore, it is important that you decide how low the stock can be allowed to fall before you square-off the position. This acts as a safety net and helps minimize your losses. Most experts would suggest this is the most important tip for intraday trading you’ll ever get. Hence the third free intraday tip is to research intraday calls, which are buy and sell recommendations, and set a stop-loss level.
If you are beginner, it is ideal to adopt the basic 3:1 reward to risk ratio strategy. What this means is that the stop loss price — the price at which you are ready to exit if you are making losses — should be three times lower than the exit price — the price at which you are willing to book profit.
4. Book profit when the target is reached
The secret to successful intraday trading lies in the high leverage and margins that trad-ers enjoy. Leverage and margins help amplify profits (as well as losses). But the trick lies in not getting greedy once that target is reached. Avoid falling into the trap, where you hope that the price will keep rising (or falling, if you short-sell). But, if there is good reason to believe that the price is likely to move in the right direction, then adjust the stop-loss accordingly. Looking around for intraday calls can be a good option before you decide to adjust the stop-loss.
5. Always close all your open positions
The fifth free intraday tip for today is to always close all your open positions. Many intraday traders choose to take delivery of the shares if the stock price target they set at the start of the day isn’t met. This may not be a good strategy. After all, the stocks were bought for intraday trading basis market trends and technical analysis of the stock movements. They may not be good enough for a long-term investment. So before con-verting to delivery, look at the intraday calls and the fundamental strength of the stock.
6. Do not challenge the market
It is near impossible to predict market movements. Often, you may find that all the factors indicate towards a bullish market. Looking at these, you may expect your target stock to rise. But, the market decides to disagree and the stock price does not rise. Bottom line: Do not get married to your analysis. If the market is not supporting a stock, sell it as soon as it hits your stop-loss level. Holding on it in the hopes that the market will see sense can increase your losses. Once again, an intraday trader cannot afford to think like an investor.
7. Research your target companies thoroughly
Seventh free Intraday tip for today is – once you have identified a set of stocks by going through professional intraday calls, make sure to research them thoroughly. Find out when any corporate events are scheduled for. These include acquisitions, mergers, bonus issues, stock splits, and dividend payments among others. These could turn out to be as important as being up-to-date with the technical levels
8. Timing is crucial
One of the best intraday trading tips is not to take a position within the first hour of trading for the day. This is because volatility tends to be high at this hour. Many experts prefer taking an intraday position between noon and 1pm.
9. Choose the right platform
The ninth trade free plan Tip is to choose the right trading platform. Intraday traders make frequent transactions and accrue small gains daily. As such, it is important for you to choose the right platform, one that allows for quick decision-making, execution, and charges minimal brokerage. At Upstox, you get minimal brokerage on intraday trades across sectors.
10. Intraday trading rules
The tenth free intraday tip for successful intraday trading is to follow intraday trading rules . Market experts recommend a few basic intraday rules for individuals. For starters, they generally advice new traders to refrain from buying and selling stocks when the markets open for the day. That’s because company stocks are usually volatile in the first hour of the day.
Secondly, experts feel that new traders should invest in small amounts to test the waters. In order to beat the volatility of stock markets, it is also handy to have a predetermined intraday trading strategy and stick to it.
It is also important to close all open positions. Intraday traders often fail to do so due to fear of booking a loss. However, it is generally a sound decision to go ahead and close the position even if the target is not achieved.
11. Process of choosing stocks for intraday trading
Intraday traders often decide to pick stocks depending on the volume of trading. General-ly, it is better to pick stocks when the volume of trading is high. That’s because if the trad-ing volume is high, prices usually move upwards too. Volume is nothing but the number of times a company’s stock is traded at a particular time.
A stock’s resistance level is a handy indicator too. Buying a stock when it breaks its re-sistance levels and moves upwards is usually a good time to pick stocks.
Following the news is very important for intraday traders. In most cases, company’s stock prices rise on the back of good news. It is also handy to keep a tab on the top gainers and losers of the week. They can tell you how different stocks have been performing over a particular time period.
12. Intraday time analysis
The twelfth free intraday tip is to do an intraday time analysis . Intraday traders frequently use daily charts to gauge how different stocks are performing on the same day. Daily charts help traders to figure out short-term stock price move-ments. Some of the popular daily charts used by traders include the hourly charts, 15-minute charts, five-minute charts and two-minute charts. It all depends on what time pe-riod the trader wants to analyze.
13. Booking when target price is reached
The thirteenth free intraday tip is to book when the target price is reached. Intraday traders can usually go two ways: they either fail to close an open position when the target is unmet or they refuse to book their profits once the target is reached. However, both the strategies are fraught with risks. It is important to close your open positions before the end of the day.
However, if a trader feels that a particular stock price has potential to increase further, it is important to readjust the stop-loss option and reduce the risk factor to a certain extent.
14. Make profit through intraday trading
The Relative Strength Index (RSI) is another tool that can help evaluate which way the stock prices can move. If the RSI of a stock is above 30, it sets off a potential ‘buy’ signal as it suggests that the stock is undersold. If it is above 70, it indicates that a stock has been overbought and sets off a potential ‘sell’ signal.
Another intraday trading strategy is to look for stocks that are not in the spotlight. That’s because the price of the stock would reduce when the demand is lower. Intraday traders should go through historical data and research reports to gauge the demand for a particular stock. If you find that the demand is high, stock prices would be higher in most cases. This is when you can choose to refrain from buying that stock.
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