In recent times, stock markets propagate investing for the long term to generate profit. While long-term investing is not the only way to earn through the stock markets. You should first know about the How to Make Money in Intraday Trading to earn handsome profits.
Intraday trading or day trading is buying and then selling the shares on the same day before the market closes. You square off all the open positions during the market hours in intraday trading.
The main feature of day trading is that the trader doesn’t take delivery of shares. Its regular order is settled in T+2 days in India, while in an intraday trade the positions are closed on the same day.
The basic requirement for intraday trading is to have a trading and a Demat account. Another factor to consider while choosing the brokerage is the level of technical support. They provide as intraday trading requires constant monitoring and thorough research.
The biggest factor to take into account before starting is the fees charged by the brokerage. By keeping this basis in mind, let us learn How to Make Money in Intraday Trading in India.
How to Make Money in Intraday Trading:-
#1. Choose Liquid Stocks:
Day trading requires you to square off the position before the end of the day. If you buy a stock that doesn’t have enough liquidity, then you may not be able to sell it when you want to exit.
Always deal only in liquid stocks is one of the basic principles of day trading. The adequate liquidity ensures that there is no limitation on the trading volume.
However, liquid stocks have many buyers and sellers which leads to volatility in the stock price. As day traders need volatility to generate profits.
#2. Research before Starting:
In day trading, the potential for profits is high.
Before initiating trades, you should conduct thorough research and zero in on the shares you want to trade-in. Then, select stocks from a sector you have an understanding of.
After finalizing the shares, monitor their price movements for some days. Along with other metrics such as volume and liquidity before initiating trades.
#3. Choose Stocks that Move with the Market:
Certain stocks mirror the movement of the broader indices. For example, if the Nifty rises these stocks will rise and vice-versa.
However, a bulk of stocks do not have a set pattern and hence one should be cautious while dealing with them.
#4. Recognize the Correct Price:
For an intraday trade to be profitable, you will have to determine the correct price for entry and the right price to exit.
Many traders employ different strategies by using support and resistance levels to determine the right entry and exit prices.
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However, some traders square off their positions as soon as the trade becomes profitable. Your strategy may differ, but try to always be disciplined and stick to the plan.
#5. Set a Stop-Loss:
Brokerages provide substantial leverage for intraday trading, which increases the profit potential and also for loss.
While, the loss during day trading can be huge, which makes setting a stop loss very important. A stop-loss limit automatically cuts your position as the share price crosses a pre-decided level.
#6. Move with the Trend:
It is advised to move with the broader market trend while day trading.
When the market is bullish, going long may be a good idea. But, if the market is bearish, you can go short or wait for stocks to bottom out before entering.
- How to Make Money in Intraday Trading
- How to Make Money in Intraday Trading in India
Successful day trading is a matter of discipline and consistency. If you frame a set of rules and stick to them, you can learn about How to Make Money in Intraday Trading to generate profits from intraday trades.
But, in day trading, people often get carried away and end up losing a lot of money.