Sharekhan Blog

5 Intraday Trading Tips for Indian Traders

  • Jan 11, 2024

Riding the timely market fluctuations can be hugely profitable with the right strategies. However, it's also risky territory for the uninitiated.Over the years, through different trial and error, there has been an introduction to the different solid intraday trading tips specific to our Indian markets - stuff. In this post, we'll share the top 5 such tips that will help you in your trading journey.

With these tips for intraday trading mentioned below, you will avoid common mistakes and build a strong foundation. You'll learn key intraday skills like keeping up with local news, stock selection, using technical analysis, nailing entry/exit and above all, managing risk smartly.

About Intraday trading

Intraday trading implies the buying & selling of stocks. So you closely track the markets and act quickly to buy and sell as prices fluctuate. It's more risky than long-term investing - you can face heavy losses if the market turns against you. But the rewards can also be much quicker for experienced traders who get their timing right. Intraday trading requires skill, alertness and discipline. It's challenging yet thrilling.

Intraday Trading Tips

1. Keep Up with Indian Market News

Being on top of all market news and events is crucial for intraday trading in India. Start your trading day by reading business newspapers and websites to understand local market sentiment.

Specifically, keep up with key developments related to large-cap stocks, news about important sectors like IT, banking, infrastructure, macroeconomic events and RBI policy decisions. Additionally, keep tabs on global cues that could impact the Indian indices.

Setting news alerts on your phone or email can ensure you react quickly to any major updates that could impact your daily trading plan. Being agile and adapting to changing market conditions based on news flow is key. Moreover, if you’re looking for the latest information, check online the intraday tips for today.

2. Prioritise Liquid Large-cap Stocks

Focus on stocks with adequate liquidity & trading volumes. Choose large-cap stocks from benchmark indices like Nifty50 and Sensex that see lakhs of shares traded daily.

Stocks with low liquidity can have vast bid-ask spreads and face extreme price volatility. This makes executing intraday trades difficult at times. Stick to the most actively traded shares on exchanges like NSE and BSE to ensure smooth order execution.

3. Utilize Technical Analysis

While news and fundamentals drive overall market direction, technical analysis is critical for intraday trades. Price charts and indicators will prove invaluable for traders.

It is wise to learn to identify chart patterns like triangles, flags, and cup-and-handle formations. Oscillators like RSI, MACD and Bollinger Bands should be used to pinpoint potential entry and exit levels. Volume trends also provide essential clues about market interest in a particular stock.

Combining technical and fundamental signals generally improves the overall trading success rate. Traders should avoid blind trading and leverage technical analysis to prevent costly mistakes. Spending time mastering this skill is well worth the effort.

4. Define Entry/Exit Points in Advance

A common mistake many traders make is not defining their entry and exit rules upfront before placing intraday trades. Discipline and decisiveness are vital in fast-moving intraday markets.

Before entering any intraday trade, traders should determine the price level to buy at, the initial stop loss level in case the trade goes against them, and profit booking targets.

Sticking to the pre-defined entry and exit thresholds is critical. Allowing emotions to interfere with trading discipline during market hours can be risky.

5. Make Risk Management a Priority

Lastly, risk management should be the number one priority for intraday traders. The volatility of markets means severe losses can happen unless adequate precautions are taken.

Traders should avoid over-exposing their capital and risk only 1-2% of total capital per trade. Stop losses should be used diligently for every trade to contain the downside. Getting swayed by greed and chasing improbable home-run trades is reckless - protecting capital should be the trader's mantra.

Following smart position sizing, diversification across sectors, and robust risk management gives a trader the best chance of long-term survival and success.

The Bottom Line

Intraday trading offers the prospect of profiting from short-term fluctuations but requires developing disciplined skills. Success comes from managing risks prudently, staying patient, learning from mistakes and adopting the right trading habits. Do thorough research, learn from experienced traders, and implement the tips discussed to tilt the odds in your favour. With the right foundation, you can achieve consistent profits in intraday trading in India.

Team Sharekhan
by Team Sharekhan

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