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Making Profits with Intraday Trading

Introduction

Intraday trading means taking a position (long or short) in stocks and squaring it off at the end of the trading day. It is possible to benefit from intraday trading , because unlike long-term investing, it does not depend upon the market going up. Even when the market is in a downtrend, it is possible to profit from intra-day trades. Let us delve into the details of how intraday trading can be profitable.

Know How Intraday Trading can be Profitable

  • Learn before you trade- The first and most important point of intraday trading is obtaining the requisite knowledge. Intraday trading requires the ability to spot a trend, identify the right stocks and utilise the same. This is difficult to achieve anything without technical analysis, along with an understanding of the fundamentals. Thus, knowledge about trading is the first stepping stone to success in intraday trading.
  • Chalk out a plan- A good trading plan is also crucial to intraday trading. A smart plan backed by adequate research serves as a roadmap for any trader. It sheds light on when to trade and when to book profits and exit.
  • A mandatory stop loss- The golden rule of intraday trading is to define a stop loss. A stop loss is an order to either sell or buy a stock when it hits a specified level. Brokerage firms provide the facility of Bracket Order (BO) and Cover Order (CO). Using this facility and setting up a mandatory stop loss prevents the risk of capital losses. This discipline also instils confidence and helps you become a better trader over time.  

Additional Read: Five suggestions for Intraday Trading

Tab on the news- To be able to make intraday trading profitable, it is vital to keep a hawk’s eye on stock market news. By keeping track of corporate actions and a vigil on the macro environment, it becomes easier to spot a trend early.

  • Check businesses, not just stocks- The greatest misconception about intraday trading is that it is all about picking the right stocks. Picking up stocks without understanding the business of the company is a mistake that can cost you dearly. Going with established businesses with good track records also ensures that the stock is liquid and can withstand large movements without any significant impact on prices.
  • Avoid overtrading- As a new entrant in the field of day trading, it is easy to get carried away. It is wise to limit your trade to a handful of stocks that are manageable and traceable.
  • Keep emotions aside- The mechanism of intraday trading is such that it may lead to great profit or loss in a short span of time. While it is important to record these wins and losses, it is not a good idea to get over-excited or dejected over either. A mind free of emotions while trading can help you make agile and informed decisions.
  • Trade only with surplus- Lastly and most importantly, it is important to know your risk appetite and trade only with a surplus. To be able to day trade, it is vital to set aside a certain amount of money that is strictly from your surplus. It should not involve the funds that you have set aside for your bread-and-butter.

Additional Read: Things to Know While Doing Intraday Trading

Conclusion

Intraday trading is not about getting rich overnight, but to be able to gain steadily each day. It requires knowledge, research, practice and control over emotions to be able to be a successful day trader. It is therefore prudent to stay focused and make informed decisions to make intraday profits.  

Disclaimer:

ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Centre, H. T. Parekh Marg, Churchgate, Mumbai - 400020, India, Tel No : 022 - 2288 2460, 022 - 2288 2470. The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. The contents herein above are solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments or any other product. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.

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