Day trading is one of the riskiest yet most lucrative types of stock investing. Buying and selling stocks during a single trading period is called day trading, also called intraday trading. Here are some fundamental intraday trading pointers that you may apply if you’re interested in using these best intraday tips to profit from the stock market.
Set a stop loss level at all times.
Use an illustration to comprehend this better. Let’s imagine you trade intraday. XYZ Ltd. is now trading at Rs. 550 per share, and you anticipate that the share price will increase today. You plan to spend Rs. 55,000 to purchase 100 shares of XYZ Ltd. But instead of rising, the price drops to Rs. 500 per share. You suffer a loss of Rs. 5,000 in a couple of hours (Rs. 500 x 100 shares). The share price of the stock you purchase may increase or decrease. It is likely that the stock you buy and decide to hold in an extended position declines on the day you trade.
Determining how much damage you are willing to take on if the transaction goes against your position is crucial. This serves as a safety net and reduces your losses. According to most professionals, this is perhaps the most critical intraday trading advice you’ll ever get. Determining a stop-loss level and researching intraday calls, which are bought and sell recommendations, is the third free intraday tip. All traders must adhere to a stop-loss, which will aid in risk management and assist you in cutting losses, as the name implies.
Avoid leaving any open positions always
For today, closing all open trades is the sixth free intraday advice. In many cases, intraday traders decide to take delivery of the shares if the stock price objective they established at the beginning of the day is not achieved. This may not be a smart move. The equities were ultimately purchased for intraday trading based on market patterns and technical analysis of the price movements. For a long-term investment, they may not be suitable. Consider what would happen if a notable business filed for bankruptcy after the market closed and the stock opened with a gap down the next day. Investors still holding the stock at the end of the day could not have the opportunity to sell, which would cause their portfolio value to suffer.
Contrarily, an intraday trader may evaluate company-specific information published throughout the day the same day, and intraday traders may manage the effect of the information in real-time. After market hours, the news would not impact intraday traders since they may have already hedged their positions. Without using any funds, it enables us to reduce overnight danger. So, before switching to delivery, look at the intraday calls and the stock’s fundamental health.
Avoid troubling the market
Predicting market fluctuations is very difficult. It often happens that all the indicators point to a bullish market. Your target stock could increase as expected. However, the stock price does not increase as the market chooses otherwise.
Be careful not to wed your analysis. The stock market is prone to fluctuation by definition. If the market is not backing your research, sell and exit your position as soon as it reaches your stop-loss level. Maintaining the belief that the market will behave as anticipated will enhance your losses.