The term “Intraday trading” suggests taking positions (buy or sell) in stocks or index and squaring them off before the end of the day. It is generally considered that intraday trading cannot give consistent returns but it is not always true. Good returns can be generated by following Zerodha intraday tips with strict (really strict!) stop losses.
In this article, let us discuss some good tips that can be used for intraday trading using Zerodha platform. Zerodha offers its platforms like Zerodha Kite and Zerodha Pi to its clients.
It is imperative to know the different functionalities of these trading platforms to do intraday trading in the most effective ways possible.
An important advantage of intraday trading is the leverage that is given because of the product type selected in Zerodha platform, which is MIS (Margin Intraday Square Off).
Some of the recommended Zerodha intraday tips would include knowing the amount of money one needs to have while doing an intraday trade.
Let us understand this with the help of an example.
Suppose Mr A has ₹50,000 in his Zerodha account and wants to buy a stock with the current stock price of ₹250. So, if he buys through ‘cash and carry’ option, he would be able to buy just 200 shares.
But, if he thinks that the stock price may increase during the day, he can buy them for the day through MIS product type which will give him say, a 14x margin. He would be able to buy 2857 shares with the same amount of ₹50,000. Now, think of the profits he would be making just by an increase of ₹1 in the stock price on that day.
So, one of the best Zerodha intraday tips is to make use of the leverage given on MIS orders. It can be calculated using Zerodha margin calculator.
Zerodha Intraday Tips Using Kite
Here is a quick look at some of the Zerodha intraday tips when you are using the Zerodha Kite trading platform:
1. Research about Stocks Using the Watch list
One can use watch lists available on Kite to keep an eye on the stocks one wants to trade-in. The details like open, high, low and close price of every stock can be seen after clicking on the market depth option that comes after hovering the cursor over stock name. It also gives an idea about the liquidity of the stock.
2. Zerodha Intraday Tips Using Charts
Kite has a functionality of checking charts of every stock. Periodicity can be selected on the basis of one’s preference.
The section “Studies” show many technical indicators which can be checked out and stock selection can be done on the basis of these criteria.
For example, in the below picture, one can see 3 lines that are showing 20, 50 and 100-day moving averages. One can also see the volumes traded and RSI figures in the chart. Similarly, one can select as many technical indicators as one wants to analyse different stocks.
Zerodha Intraday Tips Using Pi Platform
One of the most important things while trading intraday is to select stocks that can give returns through price movements within a day.
Once you have an account with Zerodha, you can easily download their software Pi on your laptop/computer. Zerodha Pi Scanner is an extremely important tool in order to select stocks that can be considered for intraday trading.
There are numerous technical indicators on this platform on the basis of which one can create his / her own buy and sell alerts. Alerts will appear automatically once it is created and loaded.
Zerodha intraday tips using these indicators can prove to be beneficial if combined with other factors like RSI, volume, volatility, etc.
Let us discuss one of the most common Zerodha intraday strategies using its software Pi.
Zerodha Intraday Tips using MACD Crossover
This is one of the most common strategies used by intraday traders. Basically, Moving Average Convergence Divergence or MACD indicator is a trend-following momentum indicator which can be used for buying and selling stocks for intraday trading.
This needs to be understood that as and when the MACD line goes over the signal line, you are provided with a ‘Buy’ signal and this movement is called a bullish crossover.
In a similar way, if this MACD line goes below the signal line, you will get a ‘Sell’ signal and that movement is called a bearish crossover.
Zerodha Intraday Tips Example
One can create a scanner for bullish crossovers happening in real-time in the stock market using Pi software.
One needs to fill in all the criteria on the basis of which screening of stocks will be done. One also needs to select periodicity like 3 minute or 5-minute candles on the basis of which the scanner will show results.
As soon as the scanner is loaded, real-time alerts start appearing on the screen. Which means that as soon as a particular stock shows a bullish crossover, an alert would be generated on the screen. Trades can be initiated on the basis of this alert.
MACD can also be combined with the Relative Strength Index (RSI) to get a more reliable alert.
For example – In the picture posted below, one can see a bullish crossover happening in HCL Technologies and initiate a trade on the basis of this alert.
Note – One should always use stop losses to prevent huge losses. Also, one must remember to square off all MIS intraday trades before 3:20 pm, failing which all such trades would be auto squared off.
Similarly, alerts can be created for bearish crossovers. As soon as the bearish crossover will happen, an alert would appear on the screen on the basis of which an intraday trade can be initiated.
It is possible to generate good returns through intraday trading but it is a skill that needs to be honed through hard work, research and awareness about the tools and platforms we have at our disposal.
With a Zerodha account, comes a plethora of ways in which stocks can be selected for intraday trading purposes. General Zerodha intraday tips should be remembered while trading in the market.
Technical indicators and screening on the basis of them is a must for intraday trading. Stay educated, stay wealthy!
In case you are looking to get started with stock market trading or investments in general, let us assist you in taking the next steps ahead.