What is Intraday Trading – Meaning, Tips & More
As a day-trader, it becomes difficult to pick the ‘right stocks’ and in the end, many individuals don’t earn gains because of selecting inappropriate stocks for their portfolio. To make it a bit understandable for you, this write-up covers it. Take a read:
What is Intraday Trading?
Unlike any equity investor who buys stocks with the purpose to invest; Intraday trading is all about buying & selling your holdings during the same trading day. The objective of the trader is to make good profits by taking advantage of ‘stock market movements. Therefore, the level of profits totally depends on the extent of fluctuations in the stock prices that the trader holds in his/her portfolio. If you are looking to perform intraday trading, then you need to have an active online trading account.
Selecting the Right Kind of Stocks for Intraday Trading
For every beginner, picking the right stock(s) during intraday trading is the challenge. But it should not discourage you from exploring wealth creation opportunities in the stock market. The following criterion will simplify the process. Here:
- The Volume of the Stock: One of the major issues whilst intraday trading is the volume of the equity shares. Here, the volume is indicated by the total number of shares that are traded in the given market at a particular time. Make sure, you take out all the points before selecting the right stock.
- As per the Stock Lists: There are a few intraday traders who particularly trade only in equity shares. The trader might have taken this decision after a detailed study of the price-movement of the shares.
- Resistance Level: It refers to a price beyond wherein equity is not able to rise. The reason for the same is an overwhelming level of supply of the equity share at some price level in the market. As an intraday trader, you must look-out for which have broken resistance & are moving northwards.
- In the News: Based on positive development of the companies, there are some stocks that end up performing better as per the expectation of the trader. Only after the basic analysis, you can think about trading in such stock.
- Weekly Movement: You may study the price movement of the stock as per their different time-horizons. The basic analysis of the last ‘one’ weeks’ price will indicate whether the closing of the stock is negative/positive on a continuous basis. Doing this will indicate the stocks suitable for intraday trading.
Some Tips to Trade
- Liquidity is a vital factor when you are choosing stocks for intraday trading. Liquid stocks are traded in huge volumes; therefore, it means you are able to purchase or sell large stock quantities without having any considerable impact on its effective price. Generally, there are not many buyers for liquid stocks which at the end prevents traders from placing orders in bulk quantities.
- Whilst doing intraday trading, always prefer to go around with the trend to earn profits on the expected lines. If the overall price during a market is rising, make sure to look for stocks whose price will rise according to that and vice-versa.
- It has been watched that the maximum number of intraday researchers miss on the research part. Make a habit of following the technical and fundamental analysis for hitting the right stocks.
On That Note: Whilst venturing into stocks, don’t just take opinions from others without any in-depth research. Develop an understanding before buying a stock.
Good Luck with that!