How safe is the intraday trading in Indian market?


The stock market can be unpredictable. And things get trickier still when you engage in intraday trading. Intraday traders buy and sell shares within a trading day. Their goal is to square off all open positions before the market closes. If you are looking to make quick money from online share trading, then intraday trading could be a viable option. Here, your profits come from minor changes in the stock prices. However, since trading decisions have to be made very quickly, it might not be easy for beginners.

Educate yourself before embarking on the journey of intraday trading. To help you out, here are tips on intraday trading for beginners.

  • Do your homework

Regardless of the kind of trading you choose, you must spend time on research. Be aware of the index and the sector to which the stock belongs. For intraday trades, both technical and fundamental analysis is necessary. While one helps in predicting price movements, the other informs you about the company. If you do the research, you will get an idea of what to expect and how to avoid unforeseen events.

  • Use an effective strategy

Trading strategies play a significant role in the stock market. If you are a day trader, you will need to keep practising and developing your strategies. Remember, a strategy that worked well in today’s market, may not perform as well tomorrow. This is why you have to be flexible and adaptable. Improve your strategies by testing them out in different scenarios and adjust them as necessary.

Some day traders perform many trades in a single day. Others focus on only a few trades based on the latest news events. So, make sure to choose a trading strategy that matches your needs.

  • Include liquid stocks

Since intraday trades are time-sensitive, adding in liquid stocks helps you remain safe. Liquid stocks have a large volume, which enables you to get in and out of trades with ease. You can buy and sell a larger volume without affecting the price significantly. This is also helpful in squaring off your positions by trading in two to three stocks of significant volumes.

  • Set up stop loss orders

This is perhaps the most effective method to remain safe from big losses. With the stop loss facility, you instruct the broker to close your trades automatically when the price falls below the specified limit. Experts often cite stop loss as a useful tool to save you from big market storms.

  • Book profits regularly

The saying goes that greed is the devil of the stock market. For a new trader, it is hard to let go of the lure of making money. But the unceasing pursuit of profits can be a problem. You could end up losing all that you had earned in the previous trend. To avoid this trap, temper your eagerness with discipline.

A good approach in this regard is to collect profits as soon your predefined targets are met. For instance, say your target price for a stock is Rs 150 and your stop loss is set at Rs 120. If the price goes up to Rs 170, collect the profits from this trade. You could then re-set the stop loss at 160 and add a new profit target. This will help you to gather profits regularly.

The bottom-line

Intraday trading has drawn huge interest in recent times. But few realise the hard work and discipline that go into the making of a successful day trader. Patience, risk management, profit management, and research will help you to trade better over time. If you need help with formulating your online share trading strategy, open an account with a reputable broker like Kotak Securities. Experienced full-service brokers provide a range of value-added services and trading platforms to ensure a stress-free trading with our experienced translators and interpreters.