Day trading is one of the riskiest but most profitable methods of stock trading. Day trading, Intraday equity tips also known as intraday trading, entails buying and selling stocks within a single trading session. If you want to use this strategy to make money in the stock market, here are some basic intraday trading tips you can use.
Choose The Appropriate Stocks
The first and most important thing you should do when starting out in day trading is choose the right stock to buy. Not every stock is a good candidate for intraday trading. Because you’d be buying and selling them during a trading session, you’d want to pick stocks with a lot of liquidity, which will make buying and selling easier. Because of their high liquidity, large cap and mid cap stocks are the best bets for day trading.
Establish entry and exit prices.
Once you’ve decided on a stock to trade, you’ll need to set entry and exit prices. Going into a trade with no goals in mind is a recipe for disaster. Set a price at which you want to buy the stock and stick to it, even if it means passing up the opportunity to do so. Set a target price at which you want to sell the stock, even if it means missing out on any additional gains the stock may or may not make.
Set a stop loss
Set a stop loss immediately after purchasing the stock. This will enable you to avoid significant losses if the stock moves contrary to your expectations. Assume you buy a stock at Rs. 600, expecting it to rise in value. However, as a safety net, you set a stop loss at Rs. 590. If the stock falls below Rs. 590, the stop loss will be triggered, and your stock will be sold at a loss of Rs. 10. You will also be protected from any further price drops.
Always Follow The Crowd
Stocks should be purchased if the market is trending upward. If it is negative, it is prudent to sell stocks short. A contrarian market view is never a good idea because it can backfire. Many people, for example, short-sell stocks when the market is bullish, expecting the price to reverse. Such reversals are rare and infrequent.
Selecting liquid stocks
Intraday equity trading is the purchase and sale of stocks on the same day. This practice necessitates a high level of market liquidity. As a result, it is critical that you trade in large-cap stocks while avoiding small-cap or mid-cap stocks. You should also avoid trading only one stock intraday and aim to diversify your position across a few stocks. Diversification like this can help you achieve a balanced intraday trading strategy while also mitigating risk.
Fixing the entry and exit prices
During intraday trading, many traders fall victim to the buyer’s fallacy, which causes them to second-guess their decision after purchasing a stock. Buyers begin to believe that they have made a poor decision, and their anxieties cause them to make rash and incorrect decisions. As a trader, you can avoid falling victim to this fallacy by deciding on an entry and exit price before beginning the transaction. These pre-determined prices allow you to remain objective and avoid unnecessary doubt.
Establish A Stop-Loss Level.
When trading intraday, the stock you chose may fall rather than rise. The relevant question in such cases is how low you will allow the price to fall before selling the stock. Choosing a price at which you consider yourself to be in a square-off position is important. This intraday trading strategy can help you reduce your losses while also acting as a safety net. The 3:1 ratio tip is ideal for beginners.
Making a profit when you reach your goal
Intraday equity trading appeals to traders because of its leverage and margins. Intraday trading has the potential to produce high returns. However, it is critical to remember that you must exit the transaction while still making a profit and not become greedy. Unless you have compelling reasons to believe that the stock price will rise further, it is best to exit when you reach your target.
Close Any Remaining Positions
Closing all open positions, i.e. completing your transactions, is one of the best intraday equity tips strategies to use. When stocks fail to meet their predetermined target price, traders frequently opt for delivery of the shares. The transaction is completed the following day to meet the target. On the other hand, changing the type of trading practise may be unwise. Because you purchased the stocks for intraday trading, delivery trading may not produce the desired results. As a result, consider the stock’s strength before making a decision on a long-term investment.
The buying and selling of stocks on the same day is known as intraday trading. This practise necessitates a lot of market liquidity. Thus, it is critical that you trade in large-cap stocks while avoiding small-cap or mid-cap stocks. When trading intraday, the stock you have chosen may fall rather than rise. The relevant question in such cases is how low you will allow the price to fall before selling the stock. The leverage and margins offered by intraday trading are what attract traders to this practise. You can make a lot of money by trading intraday. However, keep in mind that you must exit the transaction while still making a profit.
