What is Intraday Trading - How to Start and Benefits

Trading stocks within the same day is referred to as intraday trading. Traders use this method to gain from price fluctuations. To participate in intraday trading, you are required to specify the order, as the same gets squared off at the end of the day. With this trading strategy, you can learn how to trade and benefit from trading within the same day.

What is Intraday Trading?

Intraday trading involves buying and selling of shares within the same trading day. The aim from this is to capitalise on short-term price movements. Among the types of intraday trading strategies that traders employ are news-based trading, range trading, and scalping trading. In this traders are required to close all positions before the market closes to avoid overnight risk. An intraday strategy requires real-time analysis, quick decision-making, and effective risk management, focusing on stocks or other assets with high liquidity and volatility.

Steps to Follow for Intraday Trading

Before you start trading, there are a few things you should follow:

Pre-Market Evaluation

This is an important step for intraday trading, as you can identify potential trading opportunities and manage your risk effectively. To start with your pre-market evaluation, check out the latest news and see how the market has performed in the last month/week. This will help you get a rundown of what might come. 

After completing your study, find out how much capital your rivals are risking. Next, have a look at available positions and the trends of the day, like commodities responding to geopolitical events or stocks reporting earnings.

Start Trading

Now, you have done your homework, it's time you start trading. But as it is not regular trading, but intraday trading, you have to keep an eye on your stocks. As the market goes up and down, you have to take your next step. 

Do you know that you can buy and sell the same stock multiple times to gain from market performance? Well, this feature of intraday trading is what appeals to beginners and experienced traders.

Post-market Review

The post-market review is the third and final step in the intraday trading process. After the market closes, it's essential to review your trades and overall performance. Analyze the outcomes of your trades, including both successful and unsuccessful ones, to understand what worked and what didn't. This analysis will help you refine your trading strategy and improve your decision-making process for future trades. Additionally, take note of any significant market developments or news that could impact your trades in the upcoming days. This comprehensive review will provide valuable insights and contribute to your growth as an intraday trader.

Benefits of Intraday Trading

The following benefits come with trading intraday shares.

• Volatility: Focus on stocks with medium to high volatility to capitalize on price movements. This increases the potential for profits but also increases risk.
• Liquidity: Choose highly liquid stocks to ensure easy entry and exit. This minimizes the risk of significant price movements due to trading volume.
• Correlation: Focus on stocks that move in correlation with their sector or index group. This helps identify the strongest or weakest stocks within a market condition.
• Patience and Timing: Wait for the right entry points, using trendlines as a guide, and take profits at or slightly above the former price high in an uptrend or at or slightly below the former price low in a downtrend. This helps maximize profits and minimize losses.
• Risk Management: Set stop-loss and take-profit levels, avoid over-leveraging, and practice risk management techniques. This ensures you manage your risk effectively and make informed decisions.
• Tools and Equipment: Use INDmoney trading platform, access to real-time market data, and technical analysis tools. This helps you execute trades efficiently and make informed decisions.
• Discipline: Control your greed, stay true to your target and stop-loss, and avoid challenging the market until you are confident in your research. This helps you maintain discipline and achieve consistent returns.
• Continuous Learning: Continuously educate yourself about market trends and trading strategies. This helps you stay informed and adapt to changing market conditions.

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