Simple things you can do to make intra-day trading easy

Trading in the share market seems like a Herculean task for most investors. After all, this market has a reputation for being risky. People say that you need to take high risks to earn high returns and these risks increase manifolds when it comes to intra-day trading. Even those who venture into it are often confused about how to choose stocks for intraday trading. Well the fact is that, there is indeed a method to this alleged madness. If you a follow a few simple guidelines, you can soon get the hang of intraday trading and become an expert. They are as under:

1. Devise a proper investment strategy

The purpose of trading is to make quick profits based on the movements share prices. As such, to trade intraday, it is essential to devise a clear investment strategy. You need to decide how much you can afford to invest before you begin trading. You should also clearly define the amount you can afford to lose. Do your research and analyse the intraday trading indicator before you make any investment, instead of following the herd mentality.

2. Manage risks efficiently

There is a high element of risk associated with intra-day trading. As such, risk management is an integral aspect of this type of trade and you should adhere to a strict protocol while investing. You should determine your stop/loss percentage and utilise other similar methods in order to manage risks. Not determining the stop/loss percentage can prove detrimental to your investments and you could end up incurring high losses.

3. Read, review, research

The formula to succeed with intra-day trading lies in the 3Rs – Read, review, research. It is incredibly essential that you keep yourself up-to-date with emerging market trends and technologies. If you see yourself as a successful, smart trader you must do research and day trading technical analysis or appoint a financial advisor/investment broker who can provide detailed reports about current and future investments. You also must review your investments from time to time.

4. Don’t let money be your sole point of focus

This statement may sound contradictory, but money cannot and should not be your sole point of focus in the process of intra-day trading. You will stand to lose money on two fronts – if you are either too greedy to make it or if you are always fearful of losing it. The keyword for intra-day trading is ‘trade’. A good trader knows that success lies in formulating strategies that can help earn profits and mitigate risks instead of focusing on money alone.

5. Try not to panic

While this is easier said and done, not panicking is an important mantra of day-trading. It is natural to feel a little frightened when you incur a loss, but losses, just like profits, are at the heart of intra-day trading. Instead of panicking, you should try and analyse your mistakes and learn from them, instead of exiting the market impulsively.

6. Shift your focus on newer stocks regualrly

Investors wondering how to pick stocks for day trading in India, should remember that it is essential to shift focus to new stocks regularly. Avoid trading too many stocks at the same time. Look at the technical charts and indicators of every stock you’ve invested in, understand their price movements and pick new stocks as and when necessary.

Final word: With appropriate day trading technical analysis and research under your belt, you can ace the art of day-trading within no time. However, it is important to stay cautious while investing. Overconfidence can have a negative impact on your investments.

Maithili Pawar is a finance professor. She has written on share market basics. Through this article, she has provided detailed information on stock market.