Intraday Trading Guide For Beginners
Stock market trading requires skills and the ability to understand the market and trade to earn returns from the stock market. So, to start trading in the stock market, one should have a better understanding and skills to trade to get good returns from the stock
market.
A person who is new to this market should not put all their hard earned money into it; otherwise, they might lose it. So, the best thing that beginners should do is take advice from expert. Experts do lot of research on individual stock, so it is always wise to take advice from expert. People can also join courses for detailed knowledge of stock market trading available online.
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Introduction to Intraday Trading
Intraday trading is also known as Day trading. The concept of intraday trading or day trading is very simple; the trading, or we can say buying and selling of stocks, should have to occur only within one trading session and on the same day.
Let’s take an example; suppose a trader buys a stock ABC for Rupees 500 at 10:00 am and then sells that stock ABC for Rupees 502 at 1:00 pm. The profit intraday will be 2 Rs. Using leverage, intraday trading returns can be maximized.
In short, intraday trading or day trading is just all about earning profits in small amounts throughout the day trading by doing many trades in that session rather than earning huge profits at a time. So, traders with a steady hand can earn enough income with just day trading or intraday trading.
As trading means both buying and selling of stocks happens in that one session on the same day, that’s why intraday trading is called Day Trading.
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Difference between Intraday Trading and Regular Trading
The main difference between intraday trading and regular trading is that in intraday trading, both transaction, such as buying and selling of stocks, happens in just one session only and within the same day.
So, this says that the total net holding will remain zero. In regular trading, mainly one trading happens in a day, such as buying a stock or selling a stock. In regular trading, the trader has an option not to sell their stock on the same day and can hold it for a few days, months, or even years.
The other difference between intraday trading and regular trading is that in intraday trading, there will be no change in the ownership of the shares, whereas, in the case of regular trading, there is a change in the ownership of the stocks and the rights are also transferred from the seller to the buyer.
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Intraday Trading Tips for Beginners
- Start from Small
Every beginner should always start with small amount. If the first few trades give good returns, then this will boost the overconfidence in the beginners, and they start investing more, and in that, they end up losing their money. So, beginners should not invest aggressively in their initial phase. They should, at maximum only invest and focus on one to two stocks.
Starting small will allow beginners to make mistakes, get more familiar with the market, and understand how the market works. So, by this, they will not repeat their past mistakes. As their experience grows, they will learn to trade more. - Don’t Panic, Be Calm
Intraday trading is a trading time that creates a lot of panic situations and anxiety in traders, mainly the traders who are beginners in intraday trading gets in a panic situation and the state of anxiety while trading.
So, the traders trading in Intraday or day trading, especially the beginner trader, should always keep in mind to stay calm and then make decisions to trade. Panicking will only lead to defeat. So, it’s better to stay calm, understand the market situation, and start trading. - Choose the Right to Enter and Exit The Market
The best idea is to trade on the general intraday trend. This offers a low-risk entry point potential and a high-profit potential if the trend continues. Identifying such patterns can help you find helpful entry and stop loss strategies. To know when to fold, we can look at two conditions. When you reach your target profit or reach your maximum loss
limit, you don’t want to go below. Once you reach your desired profit level, you can consider exiting. - Should not get Impulsive
Traders are often discouraged when their ability to pick a name goes surprisingly not well. Beginners should use historical analysis to spot opportunities and build trading strategies based on these names. Also, a person should clearly define profit and stop-loss levels and not allow an impulsive nature to dominate their trading activity.
Traders should formulate an entry and exit strategy that best suits their needs. Once they do, don’t change impulsively while trading. Successful trading requires constant vigilance and control.
What is stop-loss? Price target indicates target of the price of share on higher side. It means, when the price of share reaches on price target, investor sells it and books the profit. Stop loss indicates the target of the price of share on lower side. It means, investor sets stop loss for particular stock and when the price of stock goes down to that target, investor sells stocks. When market is going down, investor puts limit to how much loss he would bear.
Read also: Basic Stock Market Terminology for Beginners
Conclusion
We read about what is intraday trading and how one should trade in it. Intraday Trading or day trading is a bit difficult and should be out of the box for some time for new traders. But proper knowledge and understanding of the stock market can help traders to trade better and earn profits. Always start with a small amount.
