Intraday trading is similar to buying and selling stocks and other financial instruments with just one compulsion to square off the position on the same day. If you purchase a stock and sell it off before the market closes on the same day, it is termed as an intraday trade.
Why to consider intraday trading?
- You can get leverage as high as twenty times the cash you have in your trading account for intraday trading.
- The brokerage rates are minimal compared to delivery.
- You don’t have to wait for the long term to realize the profits.
Who should do it?
Only those who have a higher risk appetite, who can spend the time to follow the market closely and can comprehend the complexities of technical analysis should indulge in intraday trading.
You need to open a Demat and trading account to get started, preferably with a discount broker who provides an easy to operate online trading platform.
Learning the tools
Before taking a risk with your hard-earned money, one should spend some time understanding the trade tools. You should at least be able to read the basic candlestick charts and understand the trading platform’s operation.
Choosing the stocks to trade
As you need to square-off the position before the market closes, you need to choose the stock with enough liquidity. To make a profitable trade, you need to pick the stocks that have enough volatility.
Identifying profitable trades
Some of the indicators that you should study closely to understand the stock price’s direction are; current market price, chart pattern, volatility, traded volume and moving average.