Intraday trading is one of the aggressive trading styles and is preferred by individuals with a high-risk tolerance. Here, traders buy and sell shares on the same day. They can enter and exit multiple times to gain from various positions. Traders with a high risk-taking profile looking for higher returns participate in day trading.
Having a trading plan and sticking to it is one of the keys to success in day trading. Traders have to adjust to the market flow. If the market trend indicates a rise, traders start taking long positions to benefit from the move.
Entering Intraday Trades
To enter a day trade, traders determine the tone set for the day in the market. The market volatility tends to be high as soon as the market opens. Once the initial volatility gets to settle down, the markets may take a particular direction, setting the tone of the day – bullish or bearish or sideways.
To make profits in the stock markets, you need to identify and follow the market trends in different time frames consistently. It helps traders to identify various opportunities. While indulging in intraday trading, individuals need to consider a few criteria, including entry price range, type of stocks to pick, the risk they are willing to take, etc. They need to set achievable profit targets and realistic ones.
Traders prefer to pick a position at the initiation of the trend and avoid taking positions when the trend fades. It helps them to stay away from the trend reversal impacts after a point.
Exiting Intraday Trades
It is essential to know when to leave gracefully to be a profitable day trader. The market takes a few moments to flip the situation 180-degree, resulting in losses. Trading strategies can minimise your potential loss on a bad trading day.
A trader needs to define an entry signal and the exit position at the beginning itself. Successful intraday traders suggest not being greedy about intraday trading returns. Once you have gained your target profit for the day, exit the position. You should apply stop-loss and exit the market without taking huge losses.
If you are new to intraday trading, you can search for proven and profitable trading strategies and apply them after adequate research. You can open your Demat and trading account with a discount broker for affordable brokerage plans.
What is a Demat Account?– A Demat is required to hold your financial securities in the stock market. A day trader need not take delivery of securities. However, sometimes, day trades are turned into delivery trades. Then, a Demat account is needed.
What is a Trading Account? – A trading account is the primary account of day traders as it allows them to place trade orders using the broker’s trading platform. These trading platforms are the way to participate in the stock exchanges to place trade orders. You can track all your trading transactions made through your trading account.
Basic Intraday Trading Strategies to Enter and Exit
Here are the basic strategies to learn how to enter and exit to succeed in intraday trading.
● Pick the Right Stocks
To make intraday trading profitable, you must pick the right stocks considering many aspects. Day traders need to select liquid stocks so that positions can be squared-off immediately when needed. You can also choose stocks that are traded in the derivatives market.
Also, day traders look at the momentum of the stock prices, its strength and trading volume. Day traders also prefer stocks filtered by market trends and indicators.
● The Right Price
One of the strategies for determining the entry and exit points is the support & resistance prices of the stocks. Traders purchase the securities when it moves beyond the support price and sells them immediately after meeting resistance levels.
● Stop Loss
Specifying stop loss is a must in day trading. Ideally, every intraday trader should specify a stop loss to avoid adverse situations if the trade goes adverse. It protects you from huge and unbearable losses. You must identify the stop loss levels and use them as part of your buy or sell order. One of the easy ways to place a stop-loss is by setting it below a swing low level where the price drops first and then bounces back. It is the support level for a stock price.
● Consider timing
Traders can avoid executing trades during the opening hour. Experienced market participants can determine rush-hour patterns that may result in significant day trading profits to capitalise on numerous opportunities. Beginners should take a position after waiting for the first half an hour and observing the stock market.
Thus, intraday trading is more about discipline and determination. Decide and strategize positions before an entry and exit.
Investments in securities market are subject to market risk, read all the related documents carefully before investing.