There’s a steep learning curve for mastering intraday trading. Here in this guide, you can find some beginner tips to steer your intraday trading journey in the right direction. These tips will help you make the right choices – deciding when to trade, what to trade, the capital needed, risk managing, creating a trading strategy that works for you and more.
Intraday trading, as the name implies, is the process of buying and selling stocks, bonds and other financial investments within the same day. Until a few years ago, day trading was seen as the sole domain of professional stockbrokers and large financial firms.
With the introduction of electronic trading, today more and more individuals are dipping their toes in intraday trading. As a beginner day trader, your job is to identify repeating patterns and then exploit them to strike a profitable deal. To do so, you need to decide which day trading market you want to focus on. In India, you have two main options – the BSE, with the Sensex index and the NSE, with the Nifty 50 index.
Remember this mantra when choosing markets – no one market is better than the others. It all depends on what you want to trade and the capital you can afford. Start by choosing a particular market and focus all your attention on it. Once you learn the ropes, you can try your hands in other markets.
If you’re new to intraday trading, then make sure to read the tips and strategies provided here to make handsome gains.
Tip #1: Set Up Your Equipment
To start intraday trading, you require the following tools:
- A desktop or laptop. Your computer should have sufficient memory and have the processing speed to run large trading programs. Slow systems impact your output. So, look for systems that are reliable and speedy enough. If possible, you can even set up two monitors for your system, though this isn’t a mandatory requirement.
- A fast internet connection. Internet connection plays a crucial role in determining your performance in the market. Invest in a reliable internet connection that is steady and offers high speeds.
- A trading platform. As a beginner, you may not have an idea about the right trading platform that works for you. Make sure to download several trading platforms, try them out and then choose the right one that matches your style.
Tip #2: Find a Broker You Trust
A broker is the person/ organisation who facilitates your trades. And, they earn a commission or fee for every trade they handle. As a day trader, look for brokers who charge low commission fees, since you will be ordering several trades in a single day, and high commission costs can eat up your profit margins.
Look for brokers who offer you both technical and research support. Speedy execution is key when it comes to intraday trading and a broker who can help you out at all times can significantly improve your trade performance.
Tip #3: Research Stocks
This is the best way to get started in intraday trading. Once you decide your trading market like the Nifty, make sure to spend some time analysing the various stocks available in it. Track average prices, dips and lows. This helps you identify when to strike a deal.
If you’re new to day trading, spend a few days just monitoring stock patterns without executing a trade. This will help you recognise opportunities, once you begin trading.
Tip #4: Only Trade with Money that you can afford to Lose
Successful traders divide their capital into two – a huge bucket with low risk and a small bucket with high risks. The huge bucket contains funds that they are saving for a long-term goal. They don’t invest this amount in high-risk ventures like intraday trading. They use conservative investment instruments for these.
On the other hand, the funds in the little bucket are used for intraday trading and other risky ventures. This way, they don’t lose all their savings at any time.
Make it a practice to, day trade only with capital that you can set aside.
Tip #5: Above all, Be Patient and Devise a Plan
Contrary to popular belief successful day traders don’t trade every single day. That doesn’t mean they don’t watch the markets regularly. Successful day traders make it a point to log into their computer, monitor the market – but, if they don’t see any great opportunity, they don’t shy away from not executing the trade.
Don’t do something just because you have to do something. Always trust your intuition and the advice of trusted experts to decide whether to push the button on a trade or not.
Plan your Trades and then Trade according to your Plans.
Get Started on Your Journey as a Day Trader
These are a few tips to help you get started. Make sure that you educate yourself about the market, share prices and more – to taste success as a day trader. Cheers.