Most of the beginner traders look for free intraday trading tips & strategies to smartly trade and get high returns. If you are a day trader or intraday trader who once was an investor or already are then you must know that intraday trading is nothing like investing in equity, commodity, or currency. In fact, the intraday trading is riskier than investing in the stock market. Or you can say trading is more aggressive than investing. Unlike a regular investor, the intraday trader tends to buy-and-sell stocks, commodities, and currency pairs in a relatively short time span. That explains short-selling which is profiting by selling at a higher price and buying at a lower price to profit in a bearish market. Thus, for yielding profit returns in a limited time, traders often use some intraday trading tips, techniques, and strategies to execute profitable trades.
Luckily, our this complete trader’s guide on intraday trading will knowledged you on everything you need to know about intraday trading from tips & tricks to strategies, recommendations to techniques and tools. And that’s not all. Everything will be described in a simplified manner.
Free Intraday Trading Tips, Tricks & Strategies
Many beginner traders are under this assumption that the stock market can help them in earning a lot of money by trading in stocks. So, are you one of those who believes in this or one who’ve bought some stocks on the suggestion of someone else and waiting to recover the cost?
Well, whoever you are! As long as you are doing intraday trading and have no idea how to place better trades then you can go through this step-by-step guide to learn some handy tips, strategies, and follow our recommendations to improve your day trading.
Choose the Right Stocks
Well, it may sound so simple yet very difficult to answer. It is because picking up the right stock plays a very important role in intraday trading. But, how to do it? that’s a tricky one.
We would describe it later in this section in the meanwhile, you need to know that trading in liquid stocks is better than trading in volatile stocks. Why we’re saying this?
It is because there has to be enough liquidity in the market, for the exchanges to execute the orders under squaring off open positions.
Note: Squaring off is a trading style where traders mostly in day trading, buys or sells and holds in hope of earning a profit.
This is why we would recommend you to go for large-cap shares that are highly liquid and have high-trading volumes, unlike mid-cap and small-caps which sometimes force investors to hold shares. Further, delete the idea of investing all your money in a single stock. According to experts, diversifying intraday positions across a handful of stocks. This can help in minimizing the risk.
Decide Entry & Exit Price
Many times we’ve seen that investors and traders become the victim of buyer’s fallacy. This is when the buyer purchases something and the next second, after the purchase; consider it a ‘wrong move’. The buyer thinks that the selection was not as good as he/she thought at the time of purchase.
If something like that ever happens to you then you can also avoid such mistakes too.
If you are wondering, how I’m supposed to do that?
The answer is, “By having an objective view regarding your trade”.
It is common for a person to have “Mind Change” after purchasing the shares. As a result, a person will sell the shares even seeing a nominal change. If as a trader you keep doing that, you may miss the opportunity to take the advantage of higher gains.
Thus, before taking a position, all you have to do is freeze the entry and exit price. It is actually a very important intraday strategy which must be followed at any cost. Entry and exit signals i.e., when to enter in a position and when to withdraw. The exit position has to be decided in case of position is taken.
Once the desired target is achieved or maximum loss is reached, one can exit the trade.
Set a Stop-Loss Level
As we mentioned earlier, the day-trading is just the opposite of long-term investment. Unlike long-term investing, in day trading, you’re going to have a bad day when everything seems to go against all your strategies.
In such a situation, the successful and professional traders know what to do. In accepting the daily gain and loss, they implement a stop loss on themselves and call it a day.
Stop-loss is an action that is used to sell the shares if the price falls below a specific limit. This intraday technique is to keep emotions at bay while doing day trading. In fact, according to many market experts, it is the most important intraday trading tip you’ll ever get.
Thus, we can say that stop-loss is an action which will allow you to square-off the position by deciding how low stocks can be allowed to fall.
Placing a Trailing Stop-Loss Level
Now that you’ve understood the stop-loss, in case you think that the stock will rise further, you can book your profits once the target is achieved. In case, if you believe there is a possibility of further rising in the stock pricing then you can place a trailing stop-loss. It will allow you to limit the maximum possible loss, without setting a limit on the maximum possible gain. In order to place a trailing stop limit order, you must continually recalculate the stop trigger price at a fixed price below the market price.
Avoid Delivery of Shares
As we know that intraday trading requires knowledge of technical analysis and most importantly, ‘Discipline’. But, both require individuals to purchase shares. In intraday trading, one has to enter and exit the market in a day while in investing, an investor invest for the years.
In intraday trading, it is quite common to see individuals take delivery of shares when the target price is not achieved or the price is close to its stop-loss. If we take delivery of shares then it will eventually short our capital to do the trading in future. In doing so, it can hamper our trading plans.
But, think about it!
This is what people do when they expect to recover to earn their money. So, even if you are not planning to square-off your position and thinking of delivery of shares then don’t forget to consider the fundamental analysis and strength of the stock. Because there is a reason for choosing stocks for intraday trading basis market trends and technical analysis of the stock movements.
News Based Stock Picking
News based stock picking is another way of choosing stocks for intraday trading. It is because of everyday corporate events, merger & acquisitions deals, bonus issues, dividend payments, stock splits, and other major & minor economic and financial events affect the stocks on the short-term basis. These events help in identifying its future movement. So, any fluctuation in the pricing of the stock can be used to create a trading opportunity on both sides.
Even if you are holding onto shares of some company which has been going through some corporate action or major change, the information will enable you to trade that particular stock accordingly.
Don’t Underestimate the Market
If history has taught us anything, is that “Nobody can’t exactly predict the stock market”. This is one of the important stock market tips which you shouldn’t forget at any cost. It is nearly impossible to predict the stock market movements. Even if it is possible then only two people can do this – one is ‘God’ and second is a ‘Liar’. However, your analysis may indicate a bullish sentiment. Looking at these, you may think your target stock to rise. But, if the market decides to disagree then the stock price does not rise.
So, the bottom line is, “No matter how good your analysis is, but the market could go in the opposite direction anytime”.
If that happens, see through your analysis again because the market is always right. However, your individual analysis can go wrong.
If the market is not going with your analysis and supporting the stock, it would be a smart move to close it as soon as it hits a stop-loss level. In believing that the market will rise again, it will do nothing but increase your losses, even more, most of the times. Once again, it is intraday trading, not a long-term investment. So, don’t try to think like an investor.
Even the professional traders with their advanced research and analysis tools can’t predict the market movements.
Note: – One basic rule of intraday trading is not to take a position within the first hour of trading. It is because the volatility tends to be high at this hour. That explains why many investors prefer to take the position between noon and 1 pm.
Infographics: Free Intraday Trading Tips