10 Intraday Tips for Beginners
Beginning your intraday trading journey can be difficult without the right guidance. While every individual must conduct his own research and devise a unique trading strategy, here are some handy tips for beginners.
Intraday trading is popular amongst market participants. Many beginners can’t wait to get started as it can be very profitable. However, it is crucial to understand that intraday trading entails a different set of risks as compared to the cash market.
Some Intraday Trading Tips for Beginners
Begin with a plan
The prospect of intraday trading can seem very exciting because of the profit it can entail. However, jumping right in without the right strategy can cost you dearly. The most important tip is to build the right strategy after gathering enough knowledge and conducting research.
Know your risk appetite
Intraday trading for beginners is no cakewalk, especially if you don’t know your risk appetite. Before starting, you should have a clear idea about your risk appetite and chalk out a risk management strategy accordingly. This will ensure that you don’t lose anything beyond what you have clearly demarcated as your tolerance for loss.
Also Watch: How to Pick Stocks for Intraday Trading
For those just starting intraday trading, it is crucial to leverage technology. Make sure your broker is providing access to the latest and state-of-the-art charting tools. You should also be able to access information and research shared by your broker at any point in time with the use of his responsive mobile app. This will help you move swiftly and make informed decisions, based on your analysis of chart patterns.
Alternate Read: Is Intraday Trading Possible Without a Demat Account?
Make fact-based decisions
A big win on any particular day could make you feel heady. However, it is important to keep your emotions aside and let facts and figures guide your decisions the next day. Don’t ever push your limits.
Define entry and target prices
Before placing any order, it is important to clearly mention the entry level and target price. It is only human to be tempted to rethink a particular strategy. However, if you stick to the parameters you have defined at the outset, discipline will work in your favour.
Maintain a strict stop loss
Stop loss is a level determined by you and is used to sell shares automatically if the price falls below this stipulated limit. A stop loss helps stem losses as it eliminates emotions from trading decisions. It is a crucial tip for intraday trading for beginners.
Booking profits when targets are reached
In intraday trading, greed and fear are enemies to watch out for. Just like it is important to cut your losses, it is also important to book profits once the target price is reached. In case you are convinced that your trading strategy requires a change, readjust the stop loss trigger to match this expectation.
Alternate Read: Intraday Trading vs Investing
Keep in line with the market
One of the most important intraday trading tips for beginners is to follow the market. Sometimes, even veterans with the most advanced charting tools are unable to predict market movement. To avoid incurring huge losses, it is wise to exit your position if the market moves against your expectations. By doing this, you may not initially make huge profits. However, it is important to remain content with small gains if your trading strategy is working in your favour.
Avoid falling into the investor mindset
Both intraday trading and investing in the cash market involve the purchase of shares. However, both these strategies have distinct factors. Taking delivery of shares if the target is not met and waiting for the price to recover is not recommended in day trading. This is because it goes against the premise of purchasing stocks for only a short period of time.
Another important tip that is important in intraday trading tips for beginners is to never rest on your laurels. Rather, constantly try to better your trading skills. It is therefore important keep up to date with the news, utilise trading apps and stay tuned to podcasts and webinars that help you hone your skills.
Intraday trading is fraught with risks, but if done right can yield profits and provide you a with a regular income stream. As a beginner however, it is important to keep these tips in mind. Following these simple steps is sure to make your intraday trading journey smooth and successful.
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