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Intraday
trading, also known as day trading, is about buying and selling shares on the
same day to book profits. In this market order, you don’t plan to take delivery
of shares.
Here are some trade free plan tips for today for a successful
intraday trading Strategy.
CHOOSE
LIQUID STOCKS
As you
know by now, intraday trading involves buying and selling a set of shares on
the same day before market closing, i.e., squaring off open positions. However,
for the stock-exchange to execute these orders, there must be enough liquidity
in the market.Thus the first tip of the free intraday tips for today is to
avoid small-cap and mid-cap stocks that may not be liquid enough. Otherwise,
there is a high probability that your squaring off order may not get executed,
forcing you to take delivery in-stead. Liquidity is the most important criteria
you must check before selecting a particular stock to trade in.Stocks with high
liquidity trade at huge volumes which allows intraday traders to buy or sell
larger quantities at ease.
FREEZE THE ENTRY & EXIT PRICE
Many stock investors and traders suffer from buyer’s fallacy. They fall prey to
misleading notions. This is when the buyer immediately starts having second
thoughts and starts doubting their play. The trader suddenly feels that the
stock selection was not as good as s/he believed while entering the trade
position.To avoid making such trading mistakes, all you need to do is follow
the second free intraday tip – To decide the entry and exit price before taking
a position. This ensures that you have an objective view.
ALWAYS SET A STOP-LOSS LEVEL
When you invest in a share, the share price can either go up or down. It is
quite possible that the share you purchase and take a long position in falls on
the day you trade instead of rising.Therefore, it is important that you decide
how much loss are you ready to bear if the trade goes against your position.
This acts as a safety net and helps minimize your losses. Most experts would
suggest this is the most important tip for intraday trading you’ll ever get.
Hence the third free intraday tip is to research intraday calls, which are buy
and sell recommendations, and set a stop-loss level.
A stop-loss will
help you manage your risk and must be followed by all traders. As the name
suggests, it helps you stop your losses.
BOOK PROFIT WHEN THE TARGET REACHED
Greed is every intraday trader’s enemy. Why, you may ask? It is because it only
takes few minutes for the market to switch sides, especially if the market is
too volatile.The secret to successful intraday trading lies in the high
leverage and margins that traders enjoy. Leverage and margins help amplify
profits (as well as losses). But the trick lies in not getting greedy once that
target is reached. Don’t wait for the stock price to increase further if it has
reached your target price.
Avoid falling into the trap, where you feel that the price will keep rising (or
falling, if you short-sell). You must make trade decisions based on facts and
strategies and not on how you feel a stock will perform.
ALWAYS CLOSE
ALL YOUR OPEN POSTIONS
The fifth
free intraday tip for today is to always close all your open positions. Many
intraday traders choose to take delivery of the shares if the stock price
target they set at the start of the day isn’t met.This may not be a good
strategy. After all, the stocks were bought for intraday trading basis market
trends and technical analysis of the stock movements. They may not be good
enough for a long-term investment.Imagine what would happen if a leading
company declares bankruptcy post market closing and the stock opens with a gap
down the following day. Investors holding the stock at the end of the day might
not get a chance to exit their position and would thus have to take a hit on
their portfolio.
DO NOT
CHALLENGE THE MARKET
It is near
to impossible to predict market movements. Often, you may find that all the
factors are indicating towards a bullish market. As usual, you may expect your
target stock to rise. But, the market decides to disagree and the stock price
does not rise.Bottom line: Do not get married to your analysis. Fluctuation is
the very nature of the stock market. If the market is not supporting your
analysis, sell and exit your position as soon as it hits your stop-loss level.
Holding on to the hopes that the market will act as you predicted it to can
increase your losses.
