Intraday trading is one of the most popular ways to make quick money on a regular basis. However, to be successful in intraday trading, you need to pick the right stocks to trade in. Wrong selection of stocks for trade can mean wrong trading decision as well as losses.
Intraday traders are always in search of the best intraday stocks for today. Gaining market knowledge and researching a bit can go a long way in picking good stocks. To further assist you with intraday trading, we list down some of the intraday trading tips that would be useful to you in making profitable trades.
Intraday Trading Tips
The first intraday trading tip is to pick those stocks for trade that are liquid in nature. Liquidity here means higher volume. Stocks with higher liquidity or volume provide greater opportunities to trade. When there is a higher volume in stock then large quantities of it can be purchased and sold without affecting its price significantly. Moreover, intraday trading is all about closing the position at the end of the day. This is possible only when you have sufficient buyers and sellers at different price levels. Liquidity in the stock depends on its quality, news flow and many other factors. Therefore, best stocks for intraday trading on NSE are those that have higher trading volumes.
The stocks that have low trading volumes and expect some news flow are generally very volatile. It is very difficult to predict the share price movement in such shares. It is advisable to avoid such stocks because they continue to show signs of volatility even after the news flow is over.
- Never Trade Against the Trend
Another important intraday trading tip is to always follow the trend of the market. Taking a trade in the direction of the market will give you good results most of the time. When the markets are going high, the best intraday stock tip is to go long in the stocks and when the market is in the bear phase, it is advisable to go short in the stocks.
To become a successful intraday trader you must always put a stop loss in your trade. Market does not always function as per your expectation. You might have thought that the coming days will see a bull market but the actual scenario turns out to be exactly opposite of it. In such scenarios, stop loss comes handy as it squares off your position when a particular price level is triggered. Stop loss acts as safety against huge losses and saves your capital by closing your trade at minimum losses. Hence, you must always put a stop loss in place for all of your intraday trades. If you are a beginner in the stock market, you can set your stop loss at a 3:1 reward to risk ratio. This means that your stop loss should be three times lower the price at which you are ready to book the profit.
The intraday traders get the benefit of high leverage and margins. This helps them to take big trades and make larger profits. Here the key to success is to not get greedy when the targets are achieved in a stock. Once the target is hit, you must book profits instead of holding it with a hope that the stock would rise further. However, in some special circumstances, the stock price movement can be strong and it can go further up, in such cases you can adjust your stop loss.
- Determine the Entry and Exit Price
You can be successful in intraday trading if you know at what price you would purchase and sell a stock. This is because, during intraday trading, price movements are very fast and your mind can immediately change if you do not have predetermined levels in your mind. Therefore, before taking a trade make sure you know the entry and exit price.
- Do Not Take Trade to Next Day
Intraday trading is all about closing your open positions by the end of the trading session. However, sometimes when your price targets are not met, you might be tempted to take delivery of stocks and take the position to the next day. This is not a good strategy because you took the trade on the basis of intraday market trends and technical levels of that stock on a particular day. There is always a possibility of a trend change on the next day and your trade turning bad. Therefore, it is always advisable to close all the intraday positions on the same day.
Another intraday stock tip to become a successful trader is to keep researching for a set of stocks that you would like to trade. Study the support and resistance levels of the stocks along with the technical levels. Also, find out which stocks have events lined up ahead and can see good price movements. This would enable you to take the trades confidently and help you earn higher profits.
The above mentioned are a few intraday trading tips that would help you in becoming a better trader. If you are a beginner, you must understand that trading is an art and you would learn it with time. Never take trades in a hurry. However, if you want any assistance regarding intraday trading, you can open a demat account with IndiaNivesh Ltd. We regularly update our clients with picks in the form of best intraday stocks for today. Moreover, these stock market tips for intraday are free.Disclaimer: "Investment in securities market and Mutual Funds are subject to market risks, read all the related documents carefully before investing."