Top Tips Of Intraday Trading For Beginners To Trade Effectively And Successfully

If you have an interest in financial markets, intraday trading or day trading is a great opportunity to make money. Intraday trading is buying or selling a financial instrument within the same day or multiple times throughout the day. Since the stock market is only operational between 09:00 to 16:00 on weekdays and select working days, intraday trades have high volatility and require the trader to make quick and informed decisions to make a profit. Although intraday traders can make a handsome profit within a day, it is also highly risky and should be conducted with caution. Especially for beginners, it can be difficult to understand the ups and downs of the market and the actions one should take. To make this process simpler, this article presents 10 intraday trading tips to trade effectively and make a steady profit.

Top 10 Intraday Trading Tips

If you want to know how to select intraday stocks for today or later in the week, here are 10 tips that can help you become a successful trader without taking any big financial risks:

1. Do your research

The first thing traders need to understand when it comes to intraday trading is to conduct thorough research. This is to avoid falling into traps that are often circulated in the market to catch uninformed traders into making risky decisions and can often be the reason for trades going wrong. Instead, do your own intraday trading research before entering or exiting a trade. 

2. Set funds aside

To make a handsome profit, intraday trading tips may advise you to invest large amounts in a particular stock or commodity. However, investing all your funds in intraday trades is never an ideal option. Even for seasoned traders, intraday trading is full of risks and it is always recommended to keep funds aside and allocate only a part of the funds for intraday trading.

3. Start with small amounts

In addition to setting funds aside for your investments, investing small amounts is always ideal. As a beginner, focus your intraday trading strategies on buying small amounts of a specific stock and learn and earn in the process. For example, if you have Rs. 10,000 to invest in intraday stocks for today, invest Rs. 5,000 in the trade for today and keep Rs. 5,000 for the next day.

4. Allocate time for intraday trading

Unlike long-term financial investments, selecting intraday stocks for today and implementing these trades is all about timing. Since trading hours are limited, you need to allocate this time for your trading and be 100% focused on analyzing the markets. One miss can translate to a loss. So keep the trading hours dedicated to buying and selling your chosen stocks. 

5. Avoid penny stocks or risky investments

Penny stocks have a low price in the market and can often seem lucrative, given the chances of making a profit if the prices rise. However, penny stocks are highly volatile and risky, often leading to losses. As a beginner, it is recommended to avoid penny stocks and make decisions only after conducting a detailed analysis of the stock. 

6. Exit when the target is achieved

When it comes to losses or gains, it is crucial to exit when the time is right. Often, when the markets are volatile, traders tend to keep waiting for a better profit or for their losses to decrease. Instead, it is recommended to stick to your daily goals and exit once the target is achieved, or cut your losses if it goes beyond a certain threshold. 

7. Always set a stop-loss

A good way to cut your losses in intraday trading is to use stop-loss for each trade. Stop-loss is a parameter you can set when buying any stock and is an order that will be executed if the markets go down. For example, if you buy a stock at Rs. 50 and set a stop-loss of Rs. 45, there will be no activity if the market is stable or the price goes high. However, if the stock prices start to go down, the order will be automatically sold at the stop-loss price i.e., Rs. 45. This ensures that you do not end up making huge losses and that you trade safely. 

8. Do not invest in many instruments simultaneously

When it comes to investing, it is advised to never “put all your eggs in one basket”. However, intraday trading strategies do not follow this pattern. As intraday traders have limited time to make decisions on their trades, trying to enter too many trades simultaneously can be risky. Create a list of stocks with priorities like intraday stocks for today, for the week and beyond. This will help you focus on the right stocks at the right time and increase your chances of earning a profit. 

9. Time your trades

Since the entry and exit for intraday trades happen within the day, traders need to know when to time their trades. For example, since the markets are highly volatile in the morning, it is considered smart to observe patterns during the opening hours and then make decisions later on when there is less volatility. Once movement begins to pick up, traders should take an exit decision towards closing hours, or earlier, since there can be a rush and an opportunity can be missed. 

10. Always do a post-trade analysis

This might be one of the intraday trading strategies, but analysis is a must if you want to be a full-time intraday trader. After each trade, you need to do a technical analysis of what went right or wrong. These learnings should be used effectively when you take your pick of intraday stocks for today and should help you become a seasoned trader. 

Conclusion

These intraday trading strategies will help you become a successful trader, especially in a dynamic financial market. There is no right or wrong in intraday trading and there is always a learning curve, even if you are an experienced trader or investor. The key to success is doing your research, always being on the lookout for movement and having your daily picks. It is advisable to create a list of intraday stocks for today and beyond, using your analysis and instinct to your advantage. Every beginner needs to start small and then take risks as they move on in their journey. To get more information to start your intraday trading journey, read more useful articles like this one on the Piramal Finance website for more suggestions on intraday trading.