Intraday Trading Tips for Beginners: Intraday trading, also known as day trading means buying and selling the stocks on the same day. Intraday trading works on the concept of price movement. So a day trader buys stocks when the price is low and sells them when the price rises. The fluctuation in price during the day gives him the opportunity to earn a profit. A trader can enter into the transaction once or even multiple times over the course of a day.
The opportunity to make quick money often attracts beginners and they jump into trading without gaining knowledge on the intraday trading strategies, techniques, etc. They end up making poor trading decisions and in turn lose money. To save you from such situations, we share top intraday trading tips for beginners to make a profit. It will help you learn how to day trade like a pro!
Intraday Trading Tips for Beginners to Gain Profit
Frame Intraday Trading Strategy
Keep a close watch on the best-performing stocks and create the best stock picking strategy. You can choose stocks which give high average daily volume. The best tip for intraday training is to look for stocks that have good correlation with major indices. This will give you good opportunity to earn from the price movement. As a beginner, you should avoid unpredictable stocks which tend to trade in a volatile market.
Pick Stocks After Historical Research
Before making the buying decision, it is important to research in depth about the company you are going to invest in. Look for the company’s past performance, quality of management, balance sheet numbers, dividend payment, profit distribution, etc. This will help you make aninformed buying decision.
[Don’t Miss it: Rules for Intraday Trading]
Do Not Risk Too Much Capital
Make a prior assessment of how much capital you are willing to risk on each trade. Set a budget which might be between 2% to 5%, depending on the capital you have. Do not exceed this budget otherwise, chances are that you might miss out on other bigger opportunity due to lack of funds.
Pre-decide the Entry Level and Target Price
Once you decide upon which stocks to buy, you must also pre determine the entry level and target price. Entry level means the price at which you intend to buy the shares and target price is the price at which you intend to sell them.
Generally, when the supply is less and there are willing buyers in the market, the stock price tends to rise. Likewise, when there are more supply and no willing buyers, stock price slashes down. A smart intraday trader should look for demand supply imbalances and use these turning points as their entry levels. When you decide on the target price, look for a risk reward ratio of at least 3:1.
Use Stop Loss
Stop loss is an order placed to buy or sell a particular stock once it reaches a certain price. Once the stop loss is triggered, the buy or sell transaction is automatically executed. It is designed to limit potential loss of the trader and to prevent him from being too greedy. It ensures disciplined trading and saves a trader from becoming an investor.
Book Profit On Hitting Target Price
In the bullish market, the greed of higher profit restricts the traders to sell their stock ever after hitting the target price. Likewise, in the bear market, fear of loss compels them to carry forward the position to the next day. However, to succeed in intraday trading, you must stay away from greed and fear. You should book the profit once the target price is achieved. In a nutshell, stick to your trading strategy and don’t expect to get rich in a single day.
With the above Intraday Trading Tips for Beginners, as well as an existing trader, can become an expert in the stock market. At Market Control, we have highly experienced and qualified team of experts who are best known for their technical and fundamental analysis and in depth research. We believe in sharing knowledge related to Indian stock market that can help you reap long term benefits.
Read our 2nd Article in NTA.NET – Intraday Trading Tips