Intraday trading is trading done within the single trading day. The very first step in intraday trading is to selecting the right stock to trade. Then the next step is to determine the levels of entry and exit. Most of the intraday traders prefer technical analysis to follow these two steps. Discipline is one of the keys to get success in the intraday trading. In this blog, we will discuss in brief about how to do intraday trading step by step.
1. Selecting the Right stock
For successful intraday trading, first of all you need to select right stock. Mostly liquid and volatile stocks give best performance for intraday trading. Selecting the stock with enough volume, high volatility, liquidity allows you to make decision regarding right enter and exit the market. Volatility gives confirmation that there are vast movements of stock price.
2. Do Your Home Work
Before you start intraday trading, you need to get knowledge about fundamentals of the stocks. Doing your homework to analyse different stocks at the end of the market, is the most important step to achieve successful day trading. It depends on various factors, liquidity, volatility, correlation of stocks with the market. Technical analysis or fundamental analysis helps you to do your homework.
3. Find the right stocks:
There are numbers of stocks in the stock market which are co-related with the movement of the major indices. For example, if the Nifty is increasing, Nifty Fifty stocks will also tend to rise and vice versa. This makes it easier for you to predict the movement of the stock.
To find out best stock for intraday trading. You can select the stocks from best performing sector. If the oil and gas sector is performing positive after few minutes of opening of the market, you can find and select stock from oil and gas sector, which helps you to increase your chance of making profit.
4. Identify the right price:
There are various different strategies that traders that traders use to identify what is the right price for entry and exit for intraday trading. Support and resistance level of the stock price helps traders to decide when to buy and sell a particular stock. Demand zone and supply zone is another way to identify the right entry and exit of the trade.
Many traders book profit immediately after the trade become profitable, which is totally wrong way to do intraday trading. You have to stick with your strategy, and as per the strategy you can exit the trade.
5. Keep a Stop Loss:
The importance of putting stop loss cannot be over-emphasised for intraday trading. Out of 100 mostly 95% traders find extremely difficult to book a loss and thus they also take delivery of a stock. In this kind of scenario, traders go against the basic fundamental of day trading and because of this trader face the major loss. Therefore, you should always keep stop loss and strictly follow it.
Finally, you are ready to do intraday trading. Move with the market trend and specially it is very important that you never trade against the trend. If the market is in strong uptrend, it is good idea to go with long and for bearish trend go with short selling.
Intraday trading is a game played with mind and only strong mind people can survive. With above guidelines, and strict discipline you can easily win in the market.