Five things to keep in mind while intra-day trading
Intra-day trading is a process of remaining very active in the markets every single trading day. It’s a technique of buying and selling in short term time frames ranging from a minute to an hour. People who trade using intra-day techniques spend their whole time in the markets to execute and manage their trades. Intra-day trading usually is a full-time job. It’s generally understood that most traders in the market earn their income through intra-day trading. Intra-day trading takes more concentration and practically the entire trading day. Understanding this trading method from a technical perspective marks your success in this domain. Diving in without appropriate knowledge can be dangerous.
Stock trading can be defined using verified theories and market patterns. Here are some recommendations for today to help you have an unforgettable intra-day trading tomorrow.
Choose Liquid Shares and set your entry – target price
Intra-day trading requires you to close your open positions before the trading session ends, and this is why experts advise selecting two or three large-cap stocks that are very liquid. Due to low trading volumes, trading in mid-size or small-cap stocks may lead to you having to keep these shares. It would help if you established your entry-level and target price before placing the buy order. After purchasing the shares, it is usual for a person’s psyche to shift. As a result, you may sell even if the price rises marginally, and this will result in missing out on more significant gains due to the price increase.
Using Stop Loss to Reduce Impact and research your wish list thoroughly
A stop loss is a trigger that causes the shares to be sold or bought automatically if the price falls below or raises above a certain level respectively. This is advantageous in lowering possible losses for traders due to change in stock prices against your position. Stop loss protects you from unlimited losses if the price goes against your position thus prevents the erosion of your trading capital. This trading approach ensures that emotions are removed from your decision. Traders should make a wish list of eight to ten stocks and thoroughly analyze them. It’s critical to understand business events like mergers, bonus dates, stock splits, dividend payments, and so on, as well as their technical levels.
Book your profits when the target is attained
Don’t second-guess yourself once your profit target has been met. In intra-day trading, discipline comes first. Take your winnings and reconsider if the stock is headed upward or lower. In intra-day trading, the goal is to keep booking and realizing profits at regular intervals. If you believe the stock’s price would rise further, the stop loss trigger may be tweaked by trailing as the prices move in your favor.
Don’t become an investor
Intra-day trading, like investing, requires the purchase of shares when a long position is taken. However, the causes influencing both of these approaches are diverse. Investing is approached mostly through fundamental analysis while trading mostly is done through technical analysis. Day traders at times take delivery of shares if the target price is fulfilled. They then wait for the price to rise again to recoup their invested trading capital. This results in intra-day trading becoming a swing investment or even a positional investment in the hope of price recovery. This is not recommended because the stock may not be worth investing in because it was purchased for a limited time.
Always follow the market trend
These elements are indicative and do not provide any assurances. Even experienced professionals using powerful techniques are unable to predict market changes. There are instances when all technical indicators point to a bull market; nonetheless, there may still be a drop. If the market swings against your expectations, it is critical to quit your position to avoid huge losses.
Intraday trading offers greater leverage, allowing for better returns in a single day. It is critical to be content to be a successful day trader by booking your profits when you earn it and cutting your losses very fast.