Stock market trading is not just thinking about the best shares to buy today, but also about making calculated moves that will help you achieve both your short-term and long-term investment goals. If you have decided to start your journey in the world of the share market, then you have to begin to consistently stalk the market and then decide to buy or sell stocks.
If you are a stock market beginner looking to learn more about intraday trading, then this guide is exactly what you need!
What is Intraday Trading? How is it different from Regular Trading?
Trading is the process of buying and selling stocks. Intraday Trading refers to buying stocks one day and then selling them the same day before the market closes. Intraday Trading requires the trader to square off his position on the same day.
On the other hand, regular trading allows the trader a specific period before he can square off his position. You remain invested in a regular period for a longer duration of time.
When it comes to intraday Trading, you never actually ‘own’ the stocks you buy. This is because you buy shares and then immediately sell them off, so the ownership doesn’t actually get transferred. But, when it comes to regular Trading, you actually become the ‘owner’ of the shares you buy as you hold them for a longer period.
How does Intraday Trading work?
To begin your journey in intraday trading, simply search ‘intraday stocks for today’ on the Internet. Here, you will find a list of stocks that you can invest in and square off your position on the same day before the market closes.
Now, use a trusted trading platform to conduct an extensive stock analysis. This includes studying stock price fluctuations, patterns, volumes, etc., and making the appropriate purchase and selling decisions.
Best Practices for Intraday Trading as a Beginner
Intraday Trading is not as simple as it sounds, especially for a beginner. You should only delve deeper into this type of trading if the outcomes match your investment objectives. Furthermore, if you do decide to deal with it, follow these practices to ensure a smooth experience:
- Identify the right time to enter and exit: Follow the prevalent intraday trade to figure out the best time to enter the market. This is the main direction in which the stock’s price is going (up or down). Always trade with the trend instead of going against it. Enter the market at a low-risk point, which can either be the beginning of the stock’s journey or a pullback (a small dip during the upward trend). If you enter the market at a low-risk point, you have a greater chance of success by either making a good profit or limiting your loss in case of pullbacks once you have reached your maximum loss limit.
Always make an exit when your stock investment has either gained your target profit amount or the pullbacks have reached the maximum loss limit you set for yourself.
- Avoid Overtrading: Placing too many trades in a single day leads to unnecessary losses and higher brokerage costs.
- Always Implement Stop Loss: Not implementing one can be your biggest mistake as a beginner. This strategy can help you avoid large losses in case your expected trend doesn’t come true.
- Start Small and Steady: As the saying goes, “Slow and steady wins the race.’ The same applies to the stock market, too. Treat it as a source of long-term investment rather than a spontaneous round of gambling.
Intraday trading can be a very profitable way for a beginner to make money from the market. However, it is not ideal for people who want the best shares to buy for long term. It requires discipline, planning, control and the ability to make quick but strategic decisions. It should not be treated as a shortcut but as a consistent path towards success. Once you get this right, your investment journey will be sorted!