According to the basic principle of the share market, an investor or trader is free to purchase or sell the assets anytime. There exist no time boundaries for buying and selling. So the traders can carry transactions as per their will anytime to generate higher profits. Additionally, there is no restriction on the volumes of assets one can buy or sell, barring certain special conditions. In the case of intraday trading, though, traders buy the stocks and then. In simple words, if a trader buys the share after the market opens, he must sell it before its closure.
Although this type of trading can come with a few risks, knowledge and proper techniques can reap benefits.
What is the Difference Between Intraday Trading and Delivery Trading?
In Intraday trading, traders call the assets they buy in the morning by the end of the day, delivery finding refrains. In delivery trading, the traders or investors hold them for longer durations instead of selling the assets. They prefer to receive the delivery of the assets in their respective Demat accounts. Their preference is towards the growth of the assets in the long run.
What are the Features of Intraday Trading?
Intraday trading mostly takes place on online platforms, where traders can easily buy and sell assets. The trading platforms offer convenient real-time methods to carry out the trades. Traders are going for intraday trading take position on a particular stock closing it before trading hours. If they do not, the automatic system in place squares it at the current price. One does not own the asset he buys and sells while carrying out intraday trading. In any case, the aim is not to own it, rather than profit from the price movements.
It is the borrowing of funds from the broker to increase the buying capacity of traders. The trader aims to amplify the purchasing power to increase the potential return. One should take note of the following things about leveraging.
1. You must specify whether your trade is an intraday trade in the online platform.
2. It is mandatory to close the positions you open on the same day.
What Indicators Can One Use for Intraday Trading?
There are some very handy indicators to use while carrying out intraday trading. Some of them are as follows.
This indicator is in the form of a line on the chart. Over a particular period, the indicator joints average closing prices of a stock. This technique is useful as the average over longer periods is more reliable. It makes comprehending the price movements of that stock.
Thus, it is very useful in studying the volatility of prices. It helps in better understanding the ongoing and upcoming trends in a market. As they help remain active and regularly track the prices, the indicator is highly useful in intraday trading.
It is a more advanced tool. It comprises three lines helping in deciding the moving average of upper limit and lower limits. It is slightly more useful than the moving averages providing greater details on the movement of prices. The indicator works alongside the principle of standard deviation.
It shows the increase or decrease in prices from the average level. It helps intraday traders set a range within which they can look to make profits.
At times the prices of stocks move without any relation to the market. The indicator moves in both directions helping in capturing the market sentiment. It shows the building up and quickening of momentum. It helps strategize during intraday trading.
What are the Things to Keep in Mind While Trading?
Key things for the intraday traders to keep in mind while trading
1. Always have a proper trading plan of action. It is essential for success in intraday trading. A proper plan will help traders book profits cut losses whenever the opportunity arises.
2. Always remember that you should spend the extra money you have on intraday trading. It is a risky affair, so you need to be careful.
3. Employee tools like Star plus can help minimize the losses.
4. Decide the entry and exit points by properly carrying out fundamental and technical analysis
5. One can pick the liquid stocks as they have high volumes and allow larger purchases and sales of assets. It can help in cutting down the losses.
6. Do not over-trade as the market may not always trend in the anticipated direction.
7. keep track of the current happenings in domestic and international markets. Most events have a major impact on stock prices.
Overall, we can say that good information and practice can benefit intraday trading. Also, you can choose trading platforms like those of Kotak securities which have all the tools to assist you.