Intraday trading is the processing of buying and selling securities on the same day without carrying them overnight. Many traders consider intraday trading as a profession, and so they should know these 7 basic rules. Now let's check one by one.
Time the market
Taking new positions between on and 1pm can increase the possibility of earning profit. Usually, FIIs and DIIs make positions during this time, and the market experiences huge volatility during these periods.
Have a strategy
Intraday trading can be considered as one of the riskiest professions in the world. You're dealing with a massive amount of money which you need to close before the market closes. To be successful, always follow and strategy and at least follow it for a month.
Why??
Strategies work perfectly when applied for a longer-term. Strategies never mean 100% profit. Good strategies imply the probability of making successful trades is high.
So always make sure your target and stop loss before entering into a trade.
Exiting the positions under unfavorable conditions
Intraday trading is all about timing. If conditions are unfavorable, immediately exit your positions without waiting for target or stop loss. Our main aim is to make extra money or protect our capital with less risk.
Start and practice with a small amount.
Always start with a small amount. Learn, practice, and execute what you learned in the real market. Once you feel confident, then you can increase your fund step by step.
It's the percentage that matters the most. Suppose a beginner makes a profit of 5%. For a small account of Rs 1000, it's just Rs. 50, but for an extensive account of Rs 10 lakh, it's Rs 50,000. So always consider percentage values without looking for absolute values.
High Volatility and Liquidity
Stocks selected for intraday trading should be highly volatile so that you can exit your positions whenever you want. Also, it should give some volatility.
Volatility is a sudden change or movement is price either in the upside or in the downside direction.
Exit your positions without waiting
Having an optimistic mind is excellent, but not when it comes to trading. For a successful trader, financial and emotional discipline is pretty much essential. One should exit all his positions regularly irrespective of profit or loss.
Analyze the market
Spend some time analyzing the market before the market opens or during market sessions. Enter new positions only when you think it's the right time. Don't get trapped in hype news.
Follow these simple rules and be a successful trader.
Happy trading. Happy investing !!!
