Ifyou’ll ask any experienced person, he’ll say that intraday trading is riskier when compared to regular investment in stock market. This is also the reason why the topmost equity intraday tip is to invest the amount you are ready to lose or the amount that will not put you in financial debt or difficulties if you lose it.
Let’s understand what is intraday trading: its basics and intraday tips for today.
What Is Intraday Trading?
Intraday trading means one day trading or single day financial transactions made in stock market. In simple words, you buy some stocks in the morning when the session starts and sell it before trading session ends that same day. Although this may seem like an easy and instant profit earning method, beginners, if not careful, can end up losing money. Hence, the beginners or novice traders should gain full knowledge before investing in intraday trading.
Advantage and Disadvantage of Intraday Trading
- There are practically zero overnight trading risks as the intraday traders close before trading session ends. Positional traders are at this risk because any local or global impact on the market can dissolve their profits overnight.
- Intraday traders can utilize short selling to benefit from stocks that are falling. However, positional traders need to keep stocks for elongated periods for making profits.
- Most brokers offer extra leverage of using more amount than your account has. Positional traders can’t have this leverage.
- Intraday trading can earn you more if you know how to handle fluctuations of intraday market.
- It is important to make correct and rapid decisions in intraday trading and most people can’t handle the stress arising from this.
- Long term trading is always known to offer more profits when compared to short term trading such as intraday trading.
- Loses in intraday trading are more and that is why it is said that you should gain full knowledge of this market before trying your hands on one day trading.
Intraday Trading Tips for Today
- If you want to trade in intraday, then you should ensure full day availability to make quick decisions.
- If you can, then avoid low liquidity penny stocks.
- While many people may go for more stocks, it is suggested to invest in 1 or 2 stocks as it will be easier to keep a track.
- For beginners, it is important to analyze target and entry prices in advance to avoid missing maximum gains.
- Go for the company with good gains for security.
- Learn to utilize stop loss efficiently as it will enable automatic selling of shares when prices reach lower than the specified limit.
- When the market starts moving in the opposite direction of your expectations, exit before you suffer huge loses.
Intraday trading has its fair share of benefits and drawbacks. However, one equity intraday tip that you should never forget is that it is of utmost significance to know your market thoroughly before trading. If you miss even some facts, you can end up with huge loses.