When it comes to the stock market, most people look for instant profit and when it comes to instant profit, intraday trading grabs attention. But setting foot directly into it might be risky and can lead to losses. To make it successful right from the beginning here we are with complete information on intraday trading for beginners.
Let us now look at all the essential aspects of intraday trade.
Intraday Trading for Beginners India
Intraday trading is the buying and selling of shares on the same day. This means that all positions that you take when the market opens will definitely be squared off before the market session for that particular day ends.
Since everything happens within a span of mere hours, the whole process is a lot faster than regular trading. This is that one reason that often scares beginner traders.
But the beginners shying away from intraday trading has now become a concept of the past. The fast trading platforms and learning sources have now encouraged even beginners to enter the fast-moving world of intraday trading.
Intraday trading is suitable not only for professional traders but also for every trader who is willing to take risks and wants to focus on trading full-time and make great profits.
So, now that we know that the beginners can also participate in intraday trading, provided that they have a good risk appetite, let us look at some tips that can aid the effective process.
Intraday Trading Tips for Beginners
It is often believed that a lot of traders who start their trading journey with intraday trading often quit the stock market early. Now, the reason for this is the absence of knowledge and the right strategies.
Therefore, it is essential for a beginner day trader to keep in mind some points that can minimize the chances of incurring losses.
Here are some of the winning intraday trading tips for beginners that help them in multiplying the profits:
Leave the greed- No doubt that intraday trading is a game of profits. But it is essential for every trader not to be driven by a lot of desire. Instead, a trader should rightly know their risk appetite and should not unnecessarily push it just to earn a little more.
Choose Liquid Stocks- The buying and selling happen on the same day; therefore, it is important to choose highly liquid stocks. This ensures that a trader quickly enters and also exits the stock. By liquidity, we mean that there should be the appropriate number of buyers and sellers for the particular stock so that the trader does not face any difficulty.
Pick Volatile Stocks- The aim of intraday trading is to make good profits in a shorter span of time. Therefore, it becomes essential to choose a stock that has good momentum. It is only these stocks that are capable of providing higher profits than the normal ones. If the prices are not fluctuating much, then it is difficult to make enough profits.
The mentality of a trader- A trader always has a different mentality when compared to an investor. So, whenever you are starting with intraday trading, remember that you cannot keep your long-term goals in mind. Your mindset should be of a trader and focus on gaining more in a lesser span of time. You should be quick in making a decision and always on your toes. You also have to keep a very close eye on the market.
Always put a stop loss- Stop loss, as the name suggests, is used to minimize your trading losses. Since intraday trading is considered highly risky because of the fast-moving prices in the market, it is vital that you always make sure that you have a stop-loss.
Apart from these tips there are some specific points that a trader should generally keep in mind when they are just starting with the day trading.
If you are also a beginner in intraday trading, you must look into some specific conditions like:
Choosing the right stockbroker
Intraday trading charges
Intraday trading strategies
Apps for intraday trading, etc.
So, let’s dive into the details to get better idea of how to start intraday trading as a beginner.
Whenever you start your trading journey in the stock market, you need a Demat and a trading account. Since this is the base for trading, it is also vital that you choose the right stockbroker.
So what describes the broker to be the right one for you?
Well, it starts with a seamless account opening process, advanced trading platform, multiple charts and indicators for stocks analysis, and lots more.
No doubt you need to do proper research to pick the right broker, but there are few like Angel One that makes your trading experience seamless and convenient. With Angel One Mobile Share Trading App you can buy, sell and trade on the go.
Angel One is one of the renowned names in the stockbroking industry. Opening a Demat account with them can be beneficial for intraday traders as they have no account opening charges and no AMC for the first year. On top of this, they also provide research and advisory that can help beginners choose the right stock.
Therefore, when you choose the right stockbroker, more than half of the work becomes more manageable.
The next thing that a trader always looks for is the intraday brokerage charges. It is an essential point for consideration. The minimal the brokerage charges, the more beneficial for the traders.
Usually, the full-service brokers have higher brokerage charges than the discount brokers. This is due to the fact that full-service stockbrokers have a better range of facilities. But in recent times, a lot of hybrid brokers have emerged that give the same facilities for a lesser price.
The brokerage charges of full-service brokers can range anywhere from 0.25% to 0.5%, whereas it is ₹10-₹20 for the discount brokers.
So, choose a stockbroker that has lesser brokerage charges so that you can maximize your profits.
The most important thing for the beginner is to look for the right strategy that can help traders in making the trade profitable and less riskier.
Here are some of the common strategies used by the trader for intraday trading:
Momentum Trading Strategy
A momentum trading strategy, as the name suggests works with the momentum of the stock. So, once the stock gain momentum it brings in the opportunity for intraday traders to get into the trade.
The traders generally look for the specific price point where they can buy the share and makes the selling decision when the stock starts losing its momentum. Ina ll the trader needs to stay aligned with the volatility of the stock to get the best profit out of the trade.
Breakout Trading Strategy
Breakout trading strategy is specifically trading at the price at the earliest point of the trend. So for taking a long position, traders keep an eye on the support level and make a trade, when the stock price breaks its support at the high volume.
Similarly for shorting the breakout at the resistance level brings in an opportunity for the traders to take a sell position.
However, to understand the trend completely it is equally important to consider other technicalities as well for which using the strategy along with the technical indicator can help you in making a decision.
Moving Average Crossover Strategy
Moving Averages says a lot about the upcoming trend and stock price in the share market. In general, the price moving above the moving average gives the signal of uptrend.
But here using two moving aveages of different time period and determining their crossovers makes it easier to make a buy or sell decision.
In this the trader generally pick the moving average of two different time period let say 9 days (fast moving average) and 26 days (slow moving average). When the fast moving average crosses the slow moving average from below it gives the buy signal.
Using this strategy thus helps you in doing proper analysis and making buy or sell decision for intraday trading.
There are many more strategies for intraday trading, it is all about what works best for you. Pick the one and it is highly recommended to stick to the one that provides you maximum benefits.
Apart from all the tips that we talked about above, it is also crucial that you are using an efficient trading app. The features that make an app great for intraday trading are listed below.
The app should have a good loading speed because it makes sure that you don’t face any difficulties while placing an order. Sometimes a trader gets stuck while executing an order and thus losses the potential profit.
There should be technical indicators and charts present in the app. Technical analysis, as we discussed before, is an essential part of intraday trading. Angel One has around 120+ technical indicators that help a trader in choosing the correct entry and exit point for a trader.
Research tips also form an essential part of the app for beginners. Moreover, the proper research tip can yield significant profits.
Keeping all these points in mind, even a beginner can make good profits in intraday trading.
So, we discussed about the tips, rules and strategies, but here comes the question of the capital requirement to start intraday trading.
This becomes even more important for beginners who think that high investment can give them higher profit, which is actually not correct. In all, starting small and understanding the stock market before investing huge capital is what the beginner must consider.
So, the one myth that needs to be busted is that a trader requires a large sum of money for intraday trading. If you are just starting intraday trading, you can start with as minimum as ₹1.
However, it is advisable that you invest at least ₹5000-₹10,000 in the beginning so that you can make good profits.
You can carry out intraday trading across various segments including, equity, commodity, currency, and even the f&o segments. It is, therefore, evident that your capital requirement will also depend on that.
So, you should invest according to the risk that you are willing to take. For example, suppose Anil and Vikram both invest ₹6000 for the first time for intraday trading.
Anil buys the stock of company A, which costs ₹100 per share. He then sells it for ₹120 per share. So the profit that he was able to generate from this entire trade is ₹1200.
On the other hand, Vikram purchased the stocks of company B, which cost ₹200 per share. He then sold the same at ₹230 per share. The profit, in this case, will be ₹900.
So, as we can see that the overall profit was not the same even though they had the exact investment amounts. This is because it all depends on where the capital is invested and not on how much money is invested.
Another important question that comes to mind when talking about intraday trading for beginners is, is intraday trading good for beginners?
The answer is yes, but provided that the trader is careful and willing to take some risks. Beginners should enter the horizon of intraday trading because it has higher return potential, great learning chances, not a lot of capital, and excitement.
It is also important to note that the risk is more in intraday trading, so the trader’s risk appetite should allow them to begin this journey.
Intraday trading demands full attention during the market sessions. So, it is crucial that you are not distracted by any other work between the market sessions.
And in the end, it is vital to use the right strategies and follow the intraday trading tips so that your journey stays smooth.
There is nothing a beginner trader cannot do, and intraday trading is also included in that. Having the right vision, knowledge, and skills can make even a beginner intraday trader make significant profits like a professional one.
So, if you are a beginner and are afraid of intraday trading, then you should not be. Just make sure that you are trading, keeping in mind the profit you are aiming for and the risk you are willing to take.
Start trading today by opening a Demat account with the renowned stockbroker. Get in touch with us and we will assist you to choose the best broker with maximum benefits.