What is Intraday Trading & How to do it effectively?
Have you watched 'The Scam 1992' web series? I am sure most of you have watched the series. If so, those scenes were Harshad Mehta was buying/selling stocks in the Ring, must have fascinated you, especially if you are a stock market enthusiast. Well, nowadays, we do not have the Ring in Stock Market, but many investors still continue the regular buying/selling of stocks, and it's called Trading.
The Stock Trading has another subset called 'Intraday Trading', where the investor buys/sells the stock during the same trading session. The main purpose behind Intraday Trading is to earn profits by leveraging the stock market movements. Hence, more accurate predictions of stock market movements lead to more profits for the investor.
The basic thing to consider for Intraday Trading is that the investor needs to close the order (square off the position) before the market closes for the day. Many investors find it difficult to pick the right stock for intraday trading purpose. So, if you want to do intraday trading, here is a guide which can help you but it is always preferred that you do your own due diligence before making any order.
- Stock Volume - The stocks which are traded in high volumes are more favourable for trading purpose, as they may be more volatile as per stock market movements as compared to low volume stocks. These high-volume stocks can give profits to the investors.
- Resistance Level - Resistance Level means a price beyond which the stock price cannot increase, depending upon various demand-supply factors. As a trader, you should look for stocks that have broken the resistance level and their prices are still increasing.
- Preparing Stock Lists - Traders usually prefers to prepare a stock list on which they trade mostly. They make this stock list after a good amount of research and then trade for a particular time period.
- Price Movements - The research work can include tracking the stock price movements in different time periods, i.e., daily, weekly, monthly. This will give a fair view of how the price are moving and accordingly you can trade that stock.
- Top Gainers and Losers - At the end of the day, you can check top gainers and losers list, which shows which stock in gaining/losing the most. This is an another way of tracking of stock price movements.
- Correlation between Stocks and Indices - You need to look for trading those stocks which are in correlation with the indices. It means that when the indices increase, the stock price should also increase. This will help in earning profits once you predict future stock market movements.
- Trends - In trading, you can also look for current trends in the market, and follow those trends. For example, if there is a trend of EV stocks in the market, you can find stocks which are correlated with the market sentiments.
The most important thing to consider is that you should never blindly follow the stock tips by other investors because every investor has their own due diligence process and the risk appetite of investors also differs. You can learn from trading strategies of other investors but always conduct your own research and analysis before making any order or investment.