Trading

An Introductory Guide On Intraday Trading Strategy For Beginners

Long-term investors purchase stocks for promising companies, while intraday traders or day traders buy stocks and close their position on the same trading day. Day trading can occur in any marketplace but it is more common among the well-funded investors who use high amounts of leverage to perform intraday trading in stock markets and foreign exchange (Forex). Intraday trading software and margin facility offered by the brokers have made possible intraday trading for beginners, who have no in-depth knowledge of the markets.

You need a Demat account

In long-term stocks, the shares purchased by the investors are transferred from the seller’s Demat account into the investor’s Demat account within 2-3 days. For intraday trading, you need a trading and Demat account. One can open a Demat account with zero opening charges. In essence, it involves the transfer of ownership of shares. On the other hand, intraday trading for beginners involves squaring off the position on the same trading day. Intraday trading today allows the day traders to hold their positions for a few seconds, a few minutes, or a few hours. Indian stock markets open at 09.15 a.m. and close at 03.30 pm on weekdays, so using intraday trading software, one can do intraday trading between this window of 06 hours and 15 minutes.

Some of the commonly used intraday trading strategies are:

Scalping: This strategy by intraday trading software attempts to make multiple small profits on small price changes throughout the day.

News-based trading: This intraday trading strategy seizes trading opportunities that arise due to volatility around the ongoing events and news.

Range trading: This strategy of intraday trading for beginners uses support and resistance levels that include the analysis of downtrends, moving averages, trendiness, and other indicators, to determine the buying and selling decisions

High frequency trading (HFT): The algo trading software uses sophisticated algorithms that allow the traders to buy and sell stocks at a pace not possible by human investors, to take advantage of the short-term or small market inefficiencies.

You can choose a broker to advise you about the intraday trading strategy that works for you. Thereafter, you will deposit funds in your Demat account, and you are all set to perform intraday trading today. A separate account is needed for intraday trading as it makes the tax management easier, because intraday profits are taxed differently. Your stockbroker should be able to provide you with advanced charting tools and research reports as these are vital to mitigate risks, and generate profits.

Is intraday trading right for me?

Technical analysis of the stocks is important to identify the price trends and trading opportunities. Trading software signals help the investors in choosing the best stocks to buy or sell at a particular moment. Intraday trading today promises higher returns but it also carries a higher risk compared to the delivery statement. So, if you have a full-time job and can’t watch the market closely, intraday trading for beginners is something that you would want to avoid. However, algo trading software allows intraday trading for beginners, as it helps them make the right decisions based on the technical analysis of chart patterns, statistical data, and market trends.

A proven intraday trading strategy is to start small, as it is quite easy to lose your entire capital in intraday trading without the right risk mitigating strategies. Also, beginners should start with the cash segment and leave FnO (Futures and Options) for a later stage, when they have mastered their intraday trading strategy.

Author

Ashutosh Gupta

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