Intraday Trading - Best Intraday Trading Indicators

Intraday Trading - Best Intraday Trading Indicators

Trading seems like rocket science to many but it is a simple thing if one has got a hang of basics. Understanding the different types of trading is essential and one such is intraday trading. Intraday trading is the process of buying and selling stocks on the same day during trading hours.

The major aim of traders for practicing intraday trading is profit creation by taking into account the stock market movements. These stock market movements during the day are helpful for short-term traders who are interested in settling down all their positions by the end of the day. However, information overload is not always very helpful to make a profitable decision.

However, intraday trading involves more risk than regular investments made into the stock market. To earn profits in intraday trading, it is essential to have some basics in place. Let us talk about some important aspects.

What are the Intraday Trading Indicators?

Intraday trading indicators are the tools which can be combined with a comprehensive plan for obtaining maximized returns during the intraday trading. In the case of intraday trading, decisions are always taken based on the price movement in the stock market.

However, if you are interested to book your profits, you will have to do a lot of research. For this, you will need certain indicators and intraday indicators are apt for that. These indicators help you in understanding the stock market and implementing your strategy wisely to get the optimum returns.

The information offered by Intraday Trading Indicators

• Intraday trading indicators share certain important pointers which will help a trader in understanding the situation in the stock market and making better decisions related to profits.
• Intraday trading indicators will help the traders in understanding the direction of the market trend. This direction of the market trend will help the traders to know about the price movements.
• These indicators help in indicating the existing momentum or lack of momentum in the stock market which will hamper the returns.
• Intraday trading indicators help in determining the popularity of securities by the measurement of volume. This volume can help the traders to know about the popularity of the market with other traders.
• The indicators help in knowing if the market is moving or not. This means the intraday trading indicators indicate if there is volatility or not in the stock market for booking profits.

Useful Intraday Trading Indicators

We can list down some of the most accurate intraday trading indicators which are actually of great help to the traders.

1. Moving Averages

The Moving average indicator can be defined as a line on the stock chart which is responsible for connecting the average of the closing rates of the market. This is calculated for a specific period. The reliability of the Moving Averages indicator is directly proportional to the period considered for calculation.

The prices of the securities tend to move in different directions; so, the Moving Averages indicator will help the traders in understanding the principal direction of price movement. The prices of stocks are volatile in nature and this intraday trading indicator will reduce the volatility of prices by which traders can understand the principal trend in the movement of price.

2. Bollinger Bands

The Bollinger bands help in providing an idea about the trading range of the stocks. These bands have 3 lines i.e. the moving average line, an upper limit and a lower one. These lines represent the standard deviation of the stocks. This Standard deviation means the amount by which the price of the stocks increases or decreases with reference to its average value.

3. Momentum Oscillators

The Momentum Oscillators show the strength of demand for a particular share at a given price. If there is an increase in the price of a share and it is on the higher side but at the same time the Momentum Oscillator is falling; it means that the demand for the share is falling and this will lead to a rise in the price of the share. However, if there is a rising Momentum oscillator it means the trend in the market is strong and will continue.

4. Relative Strength Index

The Relative Strength Index (RSI) shows the strength of a particular price of a share by tracking the last 14 periods by default. It helps in a comparison of the share price’s gains and losses and then this information is converted to an index form. This index form helps in narrowing the RSI range between 0 and 100. This index will rise with price rise and will decrease with the fall in the price of shares.

Decoding the Intraday Trading Indicators

The use of above listed most accurate intraday trading indicators will help in knowing about the risk and avoiding the risk. For doing so, the traders should decode the trading indicators and understand what the indicators imply.

1. Decoding the Moving Averages

If there are short term averages that are higher than the long term averages, then you can conclude the market trend as a bullish one. In such a scenario, traders can opt for a decision to buy securities with some specific strategy like stopping loss at the moving average.

2. Decoding Bollinger Bands

In the case of Bollinger bands, suppose a particular stock is trading at a price that is below the lower line of the Bollinger band, then there is a high probability for the price of the stock to rise in the upcoming days. In such a scenario, traders can plan to buy the stocks. On the contrary, if the stock price lies over the upper line then traders can plan to sell shares.

3. Decoding Momentum Oscillators

Suppose, the price of a share has reached a historic high point and the level of the oscillator is different from that of the price; then it indicates decreasing demand. It will also indicate the fall in the price of the stock.

4. Decoding RSI

In the case of RSI, it is advisable to analyze the history and the volatile nature of RSI before you make any decision. Usually, it is advisable that a trader should go ahead and buy a stock when the RSI is 30 and if it has risen to 70 then the trader should sell the stock. However, there might be exceptions and so it is necessary to have an analysis before making a decision.

Best technical Indicators for intraday trading

After we have known about all the most accurate intraday trading indicators, it is quite difficult to decide on the best indicator for intraday trading. There are some tips which will be a help in determining the best indicator for intraday trading.

1. Day Trading with Indicators or No Indicators

Some day traders do not use the intraday trading indicators for any information about market trends. These traders believe that when trading is being practiced based on the price of stocks, there is minimal use of indicators in those cases.

Trading indicators help in visualizing certain facts which may not be visible through a price chart. However, they have a problem of giving the sign of a reversal either very early or very late. Intraday trading indicators are simple tools and the information they provide is dependent on the data about price and volume.

2. Redundant intraday trading indicators

There are a lot of indicators that are the same as the others with very little variations. Many of them belong to the same groups but have slightest of difference. If you are using all of these indicators together, then it would be of minimal help to you as they all would give the same results and sometimes can even worsen the results.

You can pick an indicator from each group and use them for references. This would somehow reduce redundancy up to a certain extent and would help in getting coherent results.

3. Intraday trading indicators can be combined

In some cases, indicators can be combined to obtain information about factors like the direction of market trends, trading opportunities, etc. This combination of indicators can be helpful for traders to maximize their profits. However, the factors on which combination of indicators depend can be different for different traders and might depend on the trader’s choice of trade.

Precisely, there is no such single indicator that can be considered as the best indicator for the intraday trading indicator. You can use the indicator of your choice in such a way that it becomes more productive for you.

Hence, intraday trading indicators are just tools and their way of use will determine their productivity. The use of too many indicators should be avoided by traders. As a trader, you should know certain details related to your indicator like its drawbacks, its tendency to miss good trades or produce false signals, etc. These factors would help you in using your indicators more productively. For those who need expert advice on intraday trade, getting in touch with experts of IndiaNivesh is a safe bet as their experienced team is available to guide using the right tools.

Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.


Trading Strategies - Day Trading Strategies for Beginners in India

Day trading is a popular trading strategy in the stock market and for many traders it acts a source of income. Day trading is also known as intraday trading strategies or short-term trading strategies. This kind of trading involves squaring off trade positions within a single trading session. Before we get into the details of day trading strategies, it is best to understand the concept in the layman’s terms. Under this type of trading strategy, a trader buys and sells the financial instrument on the very same day. This is an attempt to capitalize on short term price fluctuations. However, to make money out of day trading, one has to follow the right day trading strategies.To get this approach right, here are a few basic day trading tips for trading strategies that work. Basic Day Trading TipsThe basic trading tips help beginners to understand where to start and how to conduct day trading activities. - Risk BearingRisk bearing is all about the risk that you are willing to take financially. It is very important to decide in advance about the money that you want to invest in the stock market. If you are looking at an affluent win, you must also be prepared for any kind of loss. - Time Commitment and PatienceFor your stock trading strategies to do wonders, it is important to devote time. Merely, one-two hours a day is not going to achieve you much. Intraday trading strategies require constant monitoring and a sharp eye for identifying market fluctuations. Also, an important factor to bear in mind is that the market opens each day and the experienced traders will be able to quickly foresee the trades and profits on certain stocks and investments. However, this should not hamper your trading strategies. You must have the patience and the will to hold back for the first few minutes before making a thoughtful call on your trade for the day.- Small InvestmentsAs a beginner, starting small is the basic key for intraday trading strategies. Let your stock trading strategies play around 3-4 stocks a day and you should be good to go. This will help you learn and understand the market better and even if you incur a loss, you will be able to withstand it. Deciding What And When To BuyThis is where the tricky part comes in. Making sure when to buy and what to buy is the most crucial step for a beginner to learn and understand. Intraday trading strategies are all about making money out of minute price movements. This leverages a large amount from the investor’s pocket, which is at a risk. But with a calculated decision of what and when to buy, one can achieve the targeted goal. Trading strategies that work are related to three important pillars; Liquidity, Volatility and Trading Volume. - LiquidityLiquidity refers to how quickly an asset can be bought or sold in the market. Liquid stocks allow you to enter and exit a position at a good price. These stocks are more easily day-traded and they also have the tendency to be more discounted as compared to other stocks. - Volatility Volatility is the average difference between the daily high and low of stocks, divided by the stock price. This, in turn, gives you your potential profit range and you know that greater the volatility, higher will be the profits.- Trading Volume The trading volume indicates how many times the stock has been traded in the given period of time. In the case of day trading strategies, it is known as ‘average-daily-trading volume’. The higher the volume of the stock, the larger is the interest in the asset. When there is an increase in volumes it indicates a price jump, either higher or lower. Trading Strategies For BeginnersThere are numerous types of day trading strategies but we will speak of the traditional and most suitable stock trading strategies for beginners out of Scalping, Fading, Daily Pivots and Momentum.- Breakout Trading A breakout occurs when the price of an asset moves above or below the resistance area. To know when the price will start trending higher, look for a breakout to the upside from a chart pattern and visa-versa. Breakouts that occur on high volume show greater conviction. This means that the price is more likely to trend in that direction, resulting in higher profits. - Pullback Trading Pullback can be referred to as pulling back or taking a pause. It is basically a moderate drop in the pricing chart in comparison to the recent peaks or uptrend. The term is usually applied to pricing drops but these drops are of short duration and hence investing during a pullback can help you make a profit later on. Benefits Of Day TradingIntraday trading strategies provide opportunities to make huge profits if you follow the right practice. Some of the benefits of day trading are as follows:- When we talk of intraday trading, you can make a profit even if there is a falling market. This is a very important benefit for day traders because one can make profits in any direction with such trading’s. - Intraday trading provides traders a leverage amount. This, in turn, benefits them in purchasing more than what they have in their account and earning a profit on the entire sum. - If you know when to stop and how much to trade for, then intraday trading is very beneficial for you. It will help you earn a profitable sum in a day’s time. - Also, a huge factor that makes intraday trading beneficial is the brokerage cost. The brokerage commission for intraday trading is less than that of stock trading in other forms. - With intraday trading, you do not have to sleep with any kind of risk involved. There are no overnight positions and hence before the market shuts down you have your profit with you. This factor is very beneficial in the stock market because anything can change overnight. There can be a stock market crash or a stock market boom. But with such trading, you can enjoy a good night’s sleep. ConclusionWith the right strategies and knowledge, day trading can help you earn good profits. As a beginner you need to take baby steps till you get a good grasp of how market functions. Lastly, if you wish to trade, open a demat account with IndiaNivesh Ltd. And enjoy their seamless services.   Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.

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Introduction to Share Trading – Share Trading Basics, Tips & Benefits

Introduction to Share TradingAs a concept, Share Trading is considered to be reserved for the Wall Street professionals and many people believe that it’s best to stay clear of it. However, the truth is, share trading is a well-researched and disciplined technique of investing which is quite simple, provided the share trading basics are right. So, yes, it is for everyone and you can start at a very slow pace and learn the tricks of the trade while investing yourself!Let us see a few key things so that you can start by yourself.What is Share Trading?Share trading is the basic process of buying and selling of stocks of a company either in the primary market, i.e. from the company directly or through the secondary market, i.e. a stock exchange, like NSE or BSE. When a company issues its first set of shares, they issue an Initial Public Offer (IPO) for the people to buy the shares of the company directly. Thus, an investor becomes an owner of the company, proportionate to the value of the shares as compared to the market value of the company. After purchase, the shares need to get listed on either of the stock exchanges like NSE or BSE (explained below) for the investor to trade in them. Benefits of share trading:There are certain distinctive benefits of share trading like:1. Growing your money over time and earning profit2. Beating the inflation3. Earning dividend4. Portfolio diversification5. Ownership of a company, by buying shares of that company. However, share trading has its own risk of the assets being volatile in nature and that affects the share prices. With good share trading tips, you can learn the methods to earn maximum profits and minimal risk in share trading.Share Trading BasicsLet us start with the basics of share trading. We will first know about the share market and stock market.o Share/Stock MarketThe share market deals with the buying and selling of shares. The Stock market is similar to the share market but in addition to shares, bonds, mutual funds, other derivative products are also traded here. Share markets are of two types i.e. Primary Share market where a company can get itself registered to issue shares for the public and Secondary Share market where the trading is carried out via a stockbroker. o Stock ExchangeShare trading takes place at the Stock Exchange where a lot of companies are listed. All major Indian companies are listed on The BSE and NSE i.e. The Bombay Stock Exchange and The National Stock Exchange. Both the stock exchanges have the same process for functionality and the same settlement procedure. o Market RegulationCertain regulatory bodies in India are responsible for regulating the share market. Let us list down the regulators in the stock market of India.• Ministry of Finance• Securities and Exchange Board of India (SEBI)• Reserve Bank of India(RBI) The Securities and Exchange Board of India (SEBI) was established in the year 1988. It is a non-statutory body regulating the share market in our country. Its main objective is the protection of the interest of the investors and the development of the capital market according to certain rules and regulations. o Depository Participant(DP)A depository can be defined as an organization or body which holds shares, bonds, mutual funds, etc. of the traders. Two main depositors in our country are National Security Depository Limited (NSDL) and Central Depository Services Limited (CDSL).A depository participant (DP) is an intermediary or an agent via which the traders make their requests to the depository. These depository participants are appointed by the depository to provide their services. For example, banks and financial institutions are the depository participants. Trading mechanism o Share trading at both The BSE and NSE takes place with the help of an electronic limit order book. This book is a record of all the limit orders that are unexecuted and are being maintained by a share trading specialist. When the buy and sell limit orders for a share are given, the specialist will keep a track of all these orders in the limit order book and will execute them when the appropriate pricing is available. o The procedure is order driven and no human intervention is involved. When the market orders are placed, they are automatically matched up with the best available limit orders. o Mostly all orders are placed via stockbrokers in the trading system. The stockbrokers provide an online facility to the customers by which orders can be placed. Since the entire trading mechanism is order-driven, the buyers and sellers are not revealed. As a result, there is more clarity in the whole process of displaying the buy and sell orders in the system. Market Indexes The two major stock market indexes are Sensex and Nifty. Investors usually tend to follow the market indexes to keep track of the movements or changes in the market. A market index can be defined as a theoretical or hypothetical aggregation of several investment holdings. These holdings represent a portion of the financial market. Sensex consists of the 30 most frequently traded stocks on the Bombay Stock Exchange. Sensex is the oldest stock index in India and was started in the year 1986. Nifty comprises of the 50 largest stocks of the National Stock Exchange. The companies need to meet specified terms of capitalization and liquidity to be included in these indices. How to start share trading? Let us have a look at the basic steps involved in how to start share trading for beginners. Firstly, you need to find out a stockbroker or a firm. Stockbrokers are of two categories i.e. full-service stockbrokers and discount stockbrokers. As the name suggests, a full-service stockbroker will provide you with numerous services starting from share trading to financial planning. Discount brokers will charge lower fees and will provide only the minimum share trading facilities. You need to scrutinize all the options wisely. Then, you need to fill up the account opening form and the KYC form. You can do this by visiting the nearest office of the broker. Along with the forms, you will need to submit certain documents like Voter ID card, PAN card, passport, etc. for identity and address proof. You can also open your share trading account online by visiting your stockbroker's website. Which shares can you invest in? Since now you know about how to do share trading, it’s time to know about the correct place of investment. In the stock market, you will find a lot of leading companies whose shares are available for trading. Now, you might be in a dilemma regarding the decision about which shares to trade? This choice of shares for trading completely depends on a trader’s personal preferences. Usually, for beginners, it is always safe to start with shares of those companies which they know very well or can get information easily if they want. Later on, after gaining some experience in on how to do share trading, you can start trading in a large variety of shares basis your thorough research & analysis. Share Trading Tips Let's discuss some share trading tips which can be of great use for beginners.o Educate yourself about the stock market, benefits of share trade, which investment would be profitable for you, etc.o Start practicing by using an online simulator as this would help you understand the working process without any risk.o Make a proper plan on your amount of investment and the period to hold the investment.o Take help from a mentor who has fair experience in the world of share trading.o Register into online sessions on stock broking, share trading for more knowledge and learning. Share trading is not very difficult but can be mastered with time. For beginners, it is always advisable to take help from experts like IndiaNivesh who not only know the pulse of the market but also have immense experience to give the best advice.   Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.

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  • Systematic Withdrawal Plans – How to use SWP?

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Through SWP, investors get the average NAV of the MF over a long duration of time. Hence, it protects them from market fluctuations and ensures that investors do not become dependent on any particular NAV.4. Tax efficiencies From a tax perspective, each withdrawal under SWP is treated the same as equity or debt mutual funds. As the tax is applied only on the amount redeemed, SWP becomes a more tax-efficient alternative as compared to Fixed Deposits or lump sum withdrawals. They are preferred to Dividend Plans too for the same reason. Dividend payouts attract DDT (Dividend Distribution Tax) which is deducted by the AMC before the payout. SWP allows  optimising the tax on capital gains by holding the investments for a longer tenure and splitting the income over multiple time periods. How to use SWPs effectively? All investors can benefit from SWP in Mutual Funds. 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They invest in an equity mutual fund as they have the potential to generate higher returns. Once they reach their desired corpus, they can opt for an SWP. Through this facility, they move the funds from the equity investments to a relatively safer/ non-volatile option such as Bank Deposits, etc.   Final Words Systematic Withdrawal Plans help to cultivate a sense of financial discipline. It can be effectively used as a means to fund your monthly expenses or finance your (or your parent’s) retired life. Not only does it offer regular income but also ensures a controlled and budgeted approach to spending. However, you should try to withdraw only the interest part and keep the capital amount intact. In case you are unable to decide how much is too much, it is best to seek the help of an expert like IndiaNivesh. The team at IndiaNivesh can help you choose the right Mutual Fund scheme and the correct SWP amount basis your financial needs and investment tenure. They also offer a wide range of financial solutions related to broking and distribution, institutional equities, strategic investments, investment banking and wealth management. You can read all about them on "Investment in securities market and Mutual Funds are subject to market risks, read all the related documents carefully before investing."

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Hard commodities- Those, that are obtained through mining and extraction. Example of hard commodities includes oil, metals and natural gas. Why should you invest in the commodities market? Commodities play an important role in the development process and hence are building blocks of every economy. Commodity investments can help you diversify your portfolio into a different asset class apart from shares and bonds and enhance the overall returns of your investments. For many of you, the general perception is that the commodity market is complex and hence not something that everyone can dabble into. However, commodity investments can fetch you handsome returns.  Here are the top three reasons to invest in commodity markets for all types of investors-1. To diversify your portfolio  One of the key factors that determine the success of your financial planning is diversification. Diversification with regards to investment portfolio means investing in various assets that are not correlated to each other of your portfolio in different asset classes. Most of you would be diversifying your portfolio in five major asset classes which include cash, shares, fixed income securities, real estate, and gold. In times of increased volatility in the markets, you are either holding on to cash or investing in gold. Gold is considered the safest haven for investment in turbulent times and Indians tend to invest in gold because it is considered as a symbol of wealth and has ornamental value. However, in reality, the gold in your portfolio is your investment in commodity and just like all the other commodities the returns from it are independent of the returns generated by stocks and bonds. Just like gold, there are other commodity investments whose returns are not correlated to equities and bond markets. The price of any commodity investment is a function of demand and supply and by doing proper research and analysis you can make profits from commodity market investments.2. To provide a hedge against inflation Inflation is the general rise in the price of goods and services over time. For any investment to be fruitful, it is important that the returns generated beat the rate of inflation.  Higher inflation effectively erodes the real returns generated by your investments in stocks and fixed income securities. However, in the case of commodities, higher inflation relates to the higher price of commodities. So, unlike other investments, your commodity investments will result in a strong performance when inflation is high. Given the current situation when inflation is constantly on the rise, investing in commodities will provide a hedge against inflation.3. To improve potential returns The prices of individual commodities can fluctuate significantly due to several factors such as demand and supply, the impact of natural calamities, exchange rates and the economic health of the nation.  The rise in infrastructure projects in a developing country like ours and also globally has had a positive impact on commodity prices. As the commodity market is still an untapped arena, many of them are trading at a lower price than their actual potential. Proper research and effective implementation of investment strategy in commodities can help investors improve the overall returns on their portfolio. What are the various options to invest in commodities? The commodities market is a very deep market and investors have many investment vehicles to access it.  Let us look at the various options available for investors to buy and sell commodities1) Investing in the physical form Commodities such as gold, silver, etc., are bought by investors in physical form.  However, not all commodities can be bought in physical form as it has its drawbacks of storage and spoilage. Even in the case of precious metals security and insurance increase the cost of your investment. Moreover, most of the time you want to invest in a commodity, not for end-use but to make profits if you anticipate that the price will increase. So, buying a commodity in physical form, except for precious metals, is generally not recommended for retail investors.2) Investment through commodity futures One of the most common ways to trade in commodities is through a commodities futures contract. It is a standardised agreement to buy or sell fixed quantities of the underlying commodity at a predetermined price on a specific date as mentioned in the contract. Also, commodity trades happen electronically through commodity exchanges where investing real-time commodity is possible.  Multi Commodity Exchange of India (MCX), National Commodity and Derivatives Exchange (NCDEX) are two of the many commodity exchanges present in the country which help investors trade in commodities. All the commodity exchanges come under the regulation of the Forward Markets Commission (FMC). 3) Commodity ETFs Commodity ETFs are another popular investment option available for retail investors to diversify their holdings in commodities. Commodity ETFs invest in a single commodity and physically hold and store it, invest in a commodity futures contract or invest in a commodity index that tracks the performance of multiple commodities. Investors can invest in commodity ETFs electronically in their Demat account. 4) Commodity Stocks Investors who are not comfortable with investing in commodity futures or ETFs can diversify their portfolio in commodities is by investing in commodity stocks. Commodity stocks are stocks of those companies which are directly or indirectly related in the manufacturing process of the commodity and hence have a positive correlation with the commodity.  For example, if you feel that the steel prices are going to increase, then you can invest in the stocks of various steel companies listed on the exchange. 5) Mutual funds One of the biggest reasons for an investor to shy away from commodity investment is that commodity investments require a lot of time, knowledge and expertise to make the right investment choices. However, now SEBI has permitted mutual funds to invest in the commodities market through the exchange-traded commodities derivatives (ETCD) route.  Thus, retail investors can now participate in commodity markets in a structured manner through professionally managed mutual funds. Takeaway Commodities are a broad and diversified asset class that offers a great investment opportunity to investors. Given the high inflationary pressure and volatility in the markets, dedicating a small portion of your portfolio to commodities will help enhance the overall performance of your investments. Investing in commodities may look intimidating and you may feel a little hesitant to explore your options, but correct guidance from an experienced financial advisor can help you understand the nuances of commodity markets and make the right investment decisions as per your investment needs. Financial advisors at IndiaNivesh possess the requisite expertise and experience to help and guide you with investments in commodities markets.Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.

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