Things to Know While Doing Intraday Trading
Trading in the equity market is tricky, even for someone with a lot of expertise in the area. Things get even tougher when you opt for intraday trading. Here, you have to finish buying and selling stocks on the same day. Hence, intraday trading strategies will differ a lot from interday trading. Your focus while picking ‘intraday stocks for today‘ is to make a quick profit and not hold on to the position. Whereas, with interday trading, you are in it for the long haul and invest your money in a stock for extended periods.
Hence, the risk present in intraday trading is much higher than in interday trading. But if you are up for the task, there are chances you can make a lot of money with some unique intraday trading strategies. Read on to learn about the key aspects of intraday trading before you select suitable ‘intraday stocks for today.‘
Things to Know While Doing Intraday Trading
Before you start creating your intraday trading strategies to select the best intraday stocks for today, there are some key things that you must learn about this strategy:
Demat Account
You must have a demat account if you want to engage in this type of trading. This will enable you to execute the deals as quickly as you desire, and you’ll benefit from sudden changes in stock prices. On the other hand, if you depend on a dealer, it might take some time to complete the trade. You might then end up losing money with your intraday trading strategies.
Be Wise
Do not jump into the equity market just because everybody else is doing it. When you invest money in equity, there is always a risk. This risk increases when you buy and sell on the same day. There is always the possibility that you will suffer losses as a result of unexpected events that occur that day.
So, it is wise to invest only the money you can spare. It will ensure that your family’s security is not put at risk. You can increase the amount as you gain experience and pick the best intraday stocks for today.
Prepare a Strategy
There is an old saying, “Failing to plan is planning to fail.” This holds true in the case of intraday trading, as the risk element is very high. If you invest your money only based on a hunch, there are chances you might lose it.
Instead, do good research and look for intraday stocks for today that meet your risk profile. Have a strategy in place when you invest the money to reduce the risk and boost your chances of making a profit from the trade.
Transaction Charges
Most platforms charge a fee on every trade you complete using intraday trading. This would mean you will have to pay a lot of money as charges if you buy many intraday stocks for today. If you want to keep this cost under control, you need to plan your trades with a decent volume size. Make sure that instead of doing many small trades in a day, you opt for a few larger trades. You must select a platform that levies lower charges on every trade.
Average Out the Cost
No one in history has been able to time the market to perfection. Therefore, it will make sense if you purchase some stock every few hours instead of making one large trade at the start of the day. This will help you average out the intraday stock price for today and reduce risk. Hence, you will be better able to correct your position if the stock price takes an adverse turn.
Stop Loss
One mistake that most traders make is getting too greedy. Thus, they hold on to an adverse position, hoping the price will soon reverse and go in the desired direction. But this is one of the worst intraday trading strategies you can use. Here, the chances of increasing the losses are very high. Hence, you need to put a stop-loss order on every stock you buy.
This will make sure that after the price goes below a certain level, the trade is completed itself. Hence, your losses are limited to a certain level.
Book Profit
Whenever you pick intraday stocks for today, you must ensure not to get greedy. If the price is moving in a given direction, this does not mean that it will continue doing so. It might reverse and start going in the opposite direction. This will reduce your profits and might even lead to a loss. Hence, you must book the profit once the price crosses a given level. This will help you make a decent profit on every trade that goes as per your target.
Choose Carefully
When you pick intraday stocks for today, you must take due care. Do not pick a company based only on its claims or just because others are doing it. Do a lot of research on the company to see its track record. If the stock prices for this enterprise are volatile, then you must opt for it only if you are sure and have done your research. Select a stock with a good track record and a transparent approach.
You need to have sound intraday trading strategies in place to reduce the risk and boost your chances of making a profit. If you need more clarification on this type of trade, you must first learn more about it. Piramal Finance has a lot of articles and blogs on intraday trading to help you learn more about it. This will give you more confidence while engaging in the equity market.