The rising popularity of stock market investments has led Indian investors to explore Intraday Trading to gain substantial returns quickly. However, many new investors often don’t know where to start. This guide is for you!
In this blog, we’ll explore six essential steps to follow in order to start Intraday Trading in India.
What is Intraday Trading?
Before moving to the essential steps, let’s first understand what Intraday Trading is.
Intraday trading refers to buying and selling securities, such as stocks, within the same trading day. Contrary to long-term investments, intraday traders focus on capitalising on small price movements. This trading style is often considered a high-risk, high-reward activity that demands constant monitoring of the market conditions. For efficient intraday trading, traders must possess quick decision-making skills, in-depth market knowledge, and a disciplined attitude toward risk management.
6 Essential Steps to Start Intraday Trading
If you are a new trader, you can follow the steps below to start intraday trading effectively:
Step 1: Open a Demat and Trading Account –
The first step towards intraday trading is to open a Demat account and trading account. A Demat account serves as a repository for holding securities in electronic form. A trading account is used for buying and selling securities in the stock market.
To open both accounts, select a reliable stock broker as your Depository Participant, fill out the account opening form with them, submit the necessary documents, and complete the KYC (Know Your Customer). Many stock brokers in India provide a seamless account opening experience, enabling digital document submission and online KYC verification.
Step 2: Do Your Research Thoroughly –
Intraday trading can be rewarding, but it also comes with significant risk potential. Therefore, research intensely before proceeding with any decision to ensure an efficient trading experience. Conducting thorough research involves both fundamental and technical analysis.
Fundamental analysis involves analysing various macro and micro variables. Technical analysis includes studying historical price movements and trading volumes to forecast future price movements. Both analyses can help you make informed decisions and enhance your chances of success in intraday trading.
Step 3: Pick Liquid Stocks –
Intraday trading requires traders to close their positions before the market closes each day. Stocks that lack sufficient liquidity may be difficult to sell when an investor wants to exit. One of the major fundamentals of intraday trading involves dealing in liquid stocks.
Adequate liquidity of stocks helps investors ensure that there are no limitations on trading volume. These stocks also have many buyers and sellers, leading to price fluctuations. This volatility is crucial for traders, as it offers opportunities to generate profit from price movements.
Step 4: Determine Entry and Exit Points –
Another crucial step for intraday trading is establishing clear entry and exit points. You can identify these points using technical analysis tools, chart patterns, and market indicators. A well-planned strategic approach can enhance trading discipline and improve chances of consistently achieving profitable trades.
Rely on analytical methods and stick to predetermined entry and exit points to make objective decisions and reduce the influence of emotions. It will help you avoid impulsive and poorly timed trades.
Step 5: Set a Stop Loss Order –
A stop-loss order is one of the significant risk management tools for intraday trading. It helps you automatically sell your position when the stock prices reach a predetermined level. It helps to limit potential losses and protect your capital.
By setting a stop-loss order, you can establish a maximum loss for a trade acceptable to you. It ensures you do not face significant financial losses if the market moves against you. This tool helps manage risks efficiently and maintain a disciplined attitude towards trading, mitigating the emotional stress of deciding when to exit a losing trade.
Step 6: Stay Updated –
Frequently monitor market news, global events, and other factors impacting stock prices. It will help you stay updated, allowing you to react swiftly to market changes and adjust your strategies accordingly.
You can make well-informed decisions and stay ahead of market trends by reviewing economic reports, company announcements, and geopolitical developments. It can also help you anticipate potential opportunities and risks, ensuring that your trading strategies remain effective.
Conclusion
Intraday trading provides the potential for significant profits through strategic buying and selling within a single trading day. With discipline, quick decision-making, and a solid understanding of market dynamics, the trader can enhance their chances of success in the fast-paced world of intraday trading.
If you are looking for a stockbroker with low brokerage charges to open a Demat account online, you can consider Choice. With more than 30 years of experience, Choice is emerging as one of the industry leaders in the finance sector. Their professional team is dedicated to offering comprehensive financial solutions to help clients achieve their future goals.
Open a free Demat account with Choice and get started with intraday trading today!
Disclaimer: Please note that while this article aims to provide accurate and up-to-date information, it should not be considered official financial advice. It is advisable to always consult a financial advisor before making investment decisions.
