Fundamental Intraday Strategies

Trading in the share market can be divided into two types, delivery based trades where shares are credited to the demat account and then sold and intraday trading. But what is intraday trading? Intraday trading is a type of trading strategy in which shares are purchased and sold on the same day. Intraday trading involves making an initial purchase or sale of a share and closing the position on the same day itself. The position can be closed in a few minutes or a couple of hours, but it has to be done before the closing bell. If you’re wondering how to do intraday trading, this guide will help you.

Here are some tips and tricks for intraday trading in the online stock market:

Choose liquid stocks:

Liquid stocks refer to stocks that have a healthy demand in the market. If you go long or purchase a share that does not have many buyers and sellers, it will be difficult for you to close the open position on the same day. The best strategy is to pick shares that have a high volume of shares that are traded in one day. This data is easily available on the stock exchange. It is called market depth. You can access open orders as a part of your trading account as well.

Intraday trading has both profit and loss potential:

Before you begin your intraday trades, it is important to understand that intraday trading profits are a sum of small profits and losses on individual trades. Not all trades may give you profits. The profit and loss depends on the shares as well as the market momentum for that particular day. This is one of the most important intraday trading tips.

Lock in your entry and exit price:

Choosing the best shares to buy today is only one part of the intraday trading strategy. It is also essential to decide your entry and exit price. You can decide the entry and exit price based on price movements or other technical analysis charts. Even if the price swings further upwards, it is better to stick to your decided prices.

Set a stop loss limit:

A stop loss is the maximum loss you can take on the trade. It is a limit beyond which a trader does not stay invested in the stock. If you set the stop loss while placing the order, the order will automatically close positions if the price breaches the stop loss limit. This is a failsafe so your losses are limited.

Focus only on 2-3 stocks at a time:

Focusing on 2-3 stocks at one time will allow you to restrict your focus to price movements in these particular stocks. If you pick too many stocks to trade in, you risk missing out on closing open positions or capitalizing on price movements.

Do thorough research:

Every person trading in the stock market has some advice about shares to pick. However, it is better to execute trades only when you have researched a particular stock and its price trends and movements.

Try small trades:

Before you start intraday trading in full swing, you can try a few small trades through your trading account to understand how it works. This will help you understand the trading system and the order matching mechanism.

You can start intraday trading by opening a demat and trading account with a reputed stockbroker like IndiaNivesh who can help you with your trades.

Nirav Singhaniya is a Financial Advisor and Share Marketer with 10 years of experience. In his free time, he likes to research on stock trading and share market trends.