How Intraday Trading Works: A Practical Overview for New Traders

Intraday trading is the buying and selling of stocks within the same trading day, aiming to profit from small price movements by entering and exiting trades quickly. For new traders, understanding how to trade intraday effectively involves mastering key concepts, strategies, and disciplined risk management. 

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What is Intraday Trading? 

Intraday trading, also known as day trading, involves completing all stock trades on the same day, avoiding overnight risks. Traders seek to capitalise on market volatility by buying stocks at lower prices and selling them at higher prices during the day or vice versa. This requires constant market monitoring and quick decision-making.  

How to Trade Intraday: Practical Steps 

• Get the Right Account: First, get yourself a good trading account and Demat account from a broker. Look for one with good fees and that can quickly do what you want it to do . 
• Focus on Liquid Stocks: Trade stocks with high liquidity (large daily trading volumes) and moderate to high volatility to ensure easy entry and exit without slippage. 
• Use Technical Analysis: Learn how to read stock charts and use tools like moving averages and support levels. These can help you figure out when to buy and sell. 
• Set Entry and Exit Points: Decide your buying price, profit target, and stop loss before placing trades to avoid impulsive decisions. 
• Start Small and Use Stop Loss: Begin with small capital, maintaining discipline by placing stop-loss orders to limit downside risk and protect capital. 
• Square-Off Trades Daily: Close all positions before market close to avoid overnight risk.  

Common Intraday Trading Strategies 

• Scalping: Making numerous small trades to gain minor profits repeatedly. 
• Momentum Trading: Buying stocks moving strongly in one direction and selling as momentum fades. 
• Range Trading: Buying near support and selling near resistance levels. 
• News-Based Trading: Capitalising on volatility triggered by market-moving news.  

Tips for Success in Intraday Trading 

• Stick to a daily routine and focus on specific stocks. 
• Keep a trading journal to see what you did well and where you messed up. 
• Don't jump into trades without thinking or keep losing positions, hoping they'll get better. 
• Be careful with leverage since it can make your losses bigger, not just your wins. 
• Always make your strategy better by watching what the market does. 

Day trading can be good, but it's not easy. New traders benefit most by focusing on liquid stocks, using reliable technical analysis, setting strict stop losses, and maintaining discipline throughout the trading day. Starting small and learning from each trade helps to gradually build confidence and profitability in intraday trading.