Many of the traders these days are keen to do intraday trading, as it gives them the opportunity to make quick money. But most of them fail due to a lack of knowledge and understanding. To prevent you from such failure here we are with the complete detail on how to do intraday trading?
Intraday trading if done right has the potential of becoming your active source of income.
So, it is good to begin by understanding what is intraday trading and then begin your journey by following the right steps given below:
How to Do Intraday Trading in India
Intraday trading is exciting and grabs the attention of a lot of users as in a shorter duration, you earn better profits. But a lot of people leave intraday midway or don’t even start with the process.
This is either because they didn’t give the right start or did it in a complex way that makes it difficult for them to understand the market nature.
Some of them don’t even begin intraday trading because they think it is too expensive or requires a lot of capital.
But this is not the case, as you can start with any amount and even start by buying a single stock.
The Indian stock market gives you great opportunities for intraday trading. But before you start the trading it is important that you,
- Know your financial goals.
- Fix a target so that you are not carried away by greed.
- Research about the trading segment before jumping right in.
- Know your risk appetite.
- Don’t put your entire capital in a single stock or even in a single trading session.
There are a lot of advantages of intraday trading that you can enjoy once you learn the process.
So, let us discuss step-up-step how you can do intraday trading.
Open Intraday Trading Account
If you are thinking to start intraday trading, then it is important to note that you need a trading account. A Demat account is not mandatory to start intraday trading because you are not holding the securities.
You can easily open an account with Choice by following some simple steps and submitting some documents. Now you get a combined Demat and trading account with Choice which makes it although more convenient.
Let us now have a look at how you can open your account with Choice:
- Open the Choice website and enter all the necessary details.
- You further need to enter your PAN card number and date of birth.
- Enter your mobile number and email ID. After this, verify both the OTPs.
- Enter the basic details.
- Upload the documents like income proof type and Aadhar card, photograph, and signature.
- Complete your e-sign on the website of NSDL and your account will be activated soon.
Once, you have successfully opened your account, you can easily do intraday trading.
Download Intraday Trading App
Now when you have opened the intraday trading account, it is important to access the trading platforms. Different stockbrokers provide different trading platforms to their clients. You can pick one according to your convenience.
Choice gives you an opportunity to trade with a smooth and user-friendly platform Jiffy.
The app is available for both Android and iOS and can be downloaded from Playstore or Appstore.
After you have successfully downloaded the app, you need to log in using the client ID provided by your stockbroker.
Good trading apps will help you in executing your trade efficiently so that you don’t miss out on any opportunity.
The most important step in intraday trading is to pick the right stocks. While there are bundles of companies listed in the stock market, how would you figure out which one is great for quick gains?
You can select your stocks on the following basis.
- Always look for mid-high volatile stocks. These stocks have the potential to fluctuate in a single market session and give potential returns. Do not enter into highly volatile stocks as they can cause losses because of the rapid fluctuations.
- You should focus more on stocks with higher liquidity. It makes it easier for the traders to enter and exit a stock. If you enter a stock with no liquidity, then you will not be able to execute your order at the desired price.
- Intraday trading can also be done efficiently with the stocks that have been in the news. Other major events like the announcement of financial reports, change in management, or anything related to the company can affect the stock price as well. So, it is beneficial to keep an eye on such stocks and then trade.
Now, when you have selected the stocks, you can add them to your watchlist so that you can monitor all of them together. In the Jiffy app, you can create up to 5 watchlists.
Do Technical Analysis
Technical analysis and intraday trading go hand in hand. Although there has always been a discussion about the appropriateness of technical analysis, it still is important.
Whenever you are buying stocks for short-term trading, it is important that you understand the market trends. Technical analysis uses different techniques and indicators to give you trading signals.
It is done on the basis of various factors including market trends, price, and volume.
Technical analysis also helps to choose a stock but more than that, it also makes it easier for a trader to figure out the right entry and exit point.
Buy or Sell Stocks
After you have successfully selected and analyzed a stock, it is time to buy and sell. So, now you have to buy at a lower price and then sell at a higher price.
But this is not the only way in which you can earn money in the stock market. You can also make money by selling first and then buying, in cases when the market is falling down. This is known as short selling.
You can easily buy/sell stocks from the Jiffy trading app. All you have to do is select the stocks that you want to trade in and click on the buy/sell option. After this, enter the quantity, price, order types, trading style, etc.
In these simple steps, you can easily do intraday trading and earn great profits.
Intraday Trading Strategies
Since there are many share market risks and most of them are associated with day trading, it is important to strategize before diving into something new. Intraday trading can be a learning experience for every trader and that too every day. It is important to figure out an intraday trading strategy according to your needs and goals and then stick to it for some time.
If you keep changing your strategies frequently, it will just create confusion and will not yield great results. There are various trading strategies that an intraday trader can use. Let us talk about some of the most used and liked ones.
- Momentum Trading Strategy- Momentum trading is trading with the flow of the market. In momentum trading, the traders buy when the market is on a bullish run and then sell the same, when it loses momentum. Traders can take the help of news, announcements, etc to choose a stock for momentum trading.
- Reversal Trading Strategy- As the name indicates, a reversal trading strategy gives you a clear signal of when the ongoing trend is about to reverse. It gives a lot of traders an opportunity to make the best out of the situation. You can accompany the strategy with various indicators like MACD and RSI for better results. In addition to this, you can also look for some candlestick patterns.
- Breakout Trading Strategy- Breakout trading strategy involves trading beyond a specified limit (support or resistance). This means that if in the bullish market, the stock price breakout its resistance level, then this brings in an opportunity for traders to go long.
- Gap and Go Trading Strategy- This strategy works great for people who are looking to short-sell. When the prices of a particular stock are opening more than the last day, it is a gap up, and if lower then gap down. This usually happens when certain news flows in the market and affects the stock price.
Apart from the strategies, there are other things that you need to keep in mind while doing intraday trading.
Intraday Trading Indicators
Intraday trading indicators play an essential role in letting a trader know the right entry and exit time. There are a wide variety of indicators that a trader can use for intraday trading. There are more than 100 indicators in the Jiffy app that are available to aid the trading journey of a client.
Some of the common indicators that are used by intraday traders are as follows.
- RSI- RSI or relative strength index helps a trader to study the market trend and then classify it as overbought or oversold. The default time period of the RSI indicator is 14, and the range varies. However, the best setting of RSI for intraday is between 8-11 periods as it increases the sensitivity.
- Moving Averages- Moving average is another popular indicator used by intraday traders. It helps a trader in identifying the trends of the market and then choosing a stock accordingly.
- Bollinger Bands- Intraday trading is all about playing with the volatility, and Bollinger bands are the right fit for finding out the same. The difference between the bands increases and decreases depending on the volatility in the market and therefore the traders can make a decision accordingly.
As discussed above, we select the volatile stocks for intraday trading. Now the volatile stocks fluctuate and are beneficial for the intraday traders, but if the market moves against your desire?
Since the volatile stocks move to some extent, it is important to use a stop loss. A stop loss is used to minimize your risks. This is a price that you set when you purchase security and when the current market price reaches here, the order is executed.
You can set stop-loss depending on your risk appetite and the duration of your trade. For example, if you bought a share for ₹110 and you are willing to lose only ₹5 and not more than that. In this case, you will set the stop loss at ₹105.
If the market moves against the grain, then you will bear a maximum loss of ₹5 only.
It is very important in intraday trading to use the right time frame because the market fluctuates every minute. It is the responsibility of the trader to make the best use of the intraday trading time.
Although the Indian market session starts from 9:15 AM- 3:30 PM, from Monday- Friday, does the entire day bring the same opportunities?
You can trade according to your analysis and practice. But the experts say that the best time to execute an intraday is during the early hours of the market session. This is usually between 9:30 AM-10:30 AM.
During these times the volatility of the market is higher as compared to the other hours. Therefore, the traders have great opportunities at making profits.
Also, during the first 15 minutes of the market session, the stocks actively react to news and happenings of the previous night. It is therefore not recommended for beginners to trade during these minutes.
As far as expert traders are concerned, they usually take the advantage of this time. However, irrespective of everything, there is no hard and fast rule that everyone should adhere to these timings. A trader can look for the time according to their own analysis.
When it comes to intraday trading, most of the traders reap the benefit of leverage in day trading. No doubt, till September 2021, most of the traders were using the margin facility to multiply their profit.
But with the implementation of the SEBI New rules for intraday margin, it has now become difficult for traders to trade with high leverage.
This is because of the fact that as per the rule, the trader can now avail the maximum leverage of 5x from the stockbroker which was earlier 20x or more.
So, here if you want to maximize the profit even without the margin funding, it is important to use your own fund. But be careful and trade with the capital that you can bear to lose in intraday trading.
There is the benefit too as trading without margin prevent you from margin call and to face much losses in trade.
If you are looking to start your intraday trading journey, you need to keep a few things and rules of intraday trading in mind. You should have a trading account, a great eye on the news, and an understanding of technical analysis. It is a great way of generating income from shorter trading sessions if done with caution.
If you want to venture into intraday trading, open free Demat account today!