Sharekhan Blog

5 Tips For Intraday Trading

  • Jul 24, 2023

Intraday trading seems to have become a popular choice for inexperienced traders who want to earn rapid gains without having to wait around for a long time. Performing intraday trading properly might result in success.

However, strategies for intraday trading are fundamentally different from those for long-term investing. Because trades are completed within hours, intraday trading requires extensive market knowledge, and the mistake margin is small. A stock selection must be exact as a consequence. These are some intraday trading pointers that an intraday investor may find helpful.

How Should Intraday Stocks Be Chosen?

It is not difficult to choose intraday stocks. You must adhere to a few intraday trading guidelines for stock selection and setting up support and resistance levels. Then it would be beneficial if you used specific tactics that would enable you to benefit from your wise decisions.

Think about liquid assets

The most critical concern for intraday traders is stock liquidity. Liquidity is the capacity to transact in an asset without impacting its price. Liquidity in the stock market refers to an investor's ability to acquire and sell shares promptly. Investors who want to trade equities over the short term must have it. Liquid stock investment is essential since the stock must be acquired and sold in a single day. High liquidity guarantees that the stock may be bought or sold whenever necessary, allowing for capturing any potential profits that may result from intense market movement in a single day. It would be best to look for stocks that may be bought and sold in significant quantities without affecting the price.

Avoid investing in volatile stocks.

Volatile stocks might have more significant profit potential in today's fast-paced marketplace. However, intraday trading may be dangerous and should only be used when you have a solid grasp of the particular stock or industry. Stop losses should always be included in your intraday trading strategy to reduce risk. The trade will be closed promptly if the stock price exceeds your specified stop-loss level. By taking this measure, massive losses from a swift turn for the worst are avoided.

Associated Stocks

One of the simplest forms of intraday trading is buying shares of firms closely related to an index or industry. It is pretty simple to get significant returns on investment due to the performance of the broad index or sector, which offers a clear image of the shifting market. Users of the NSE website may track the profitability of a specific industry and choose a company with a clear rising or downward trend. It is easy to trade since the stock price movement is correlated with the index or sector.

Decide on transparency

Generally speaking, investing in the stocks of companies that adequately tell the market about their business operations is recommended. Making a decision is easy when you consider all the pertinent information. If important information is kept a secret, you can take the wrong attitude and suffer damage. For intraday trading, only companies with simple business processes should be chosen. Stable management is another factor to take into account while choosing intraday stocks.

News-Related Stocks

A typical intraday stock picking strategy involves selecting stocks that respond to the news. These stocks often react to any positive or negative news in the media. Understanding the media's moves makes taking stances easier to handle. However, it would be best to use caution when investing in overly event-sensitive stocks. Sometimes, the course of the news may be altered by these stocks. Even when the information is good, the share price can decline.

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