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Intraday Trading for Beginners
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When it comes to the stock market, most people look for instant profit and when it comes to instant profit, intraday trading grabs attention. But setting foot directly into it might be risky and can lead to losses. To make it successful right from the beginning here we are with complete information on intraday trading for beginners.
Let us now look at all the essential aspects of intraday trade.
Intraday Trading for Beginners India
Intraday trading is the buying and selling of shares on the same day. This means that all positions that you take when the market opens will definitely be squared off before the market session for that particular day ends. This is when we are hoping that you are aware about the Intraday square off time in India.
Since everything happens within a span of mere hours, the whole process is a lot faster than regular trading. This is that one reason that often scares beginner traders.
But the beginners shying away from intraday trading has now become a concept of the past. The fast trading platforms and learning sources have now encouraged even beginners to enter the fast-moving world of intraday trading.
Intraday trading is suitable not only for professional traders but also for every trader who is willing to take risks and wants to focus on trading full-time and make great profits.
So, now that we know that the beginners can also participate in intraday trading, provided that they have a good risk appetite, let us look at some tips that can aid the effective process.
Trading Guide for Beginners
It is often believed that a lot of traders who start their trading journey with intraday trading often quit the stock market early. Now, the reason for this is the absence of knowledge and the right strategies.
Therefore, it is essential for a beginner day trader to keep in mind some points that can minimize the chances of incurring losses.
Here are some of the winning intraday trading tips for beginners that help them in multiplying the profits:
- Leave the greed- No doubt that intraday trading is a game of profits. But it is essential for every trader not to be driven by a lot of desire. Instead, a trader should rightly know their risk appetite and should not unnecessarily push it just to earn a little more.
- Choose Liquid Stocks- The buying and selling happen on the same day; therefore, it is important to choose highly liquid stocks. This ensures that a trader quickly enters and also exits the stock. By liquidity, we mean that there should be the appropriate number of buyers and sellers for the particular stock so that the trader does not face any difficulty.
- Pick Volatile Stocks- The aim of intraday trading is to make good profits in a shorter span of time. Therefore, it becomes essential to choose a stock that has good momentum. It is only these stocks that are capable of providing higher profits than the normal ones. If the prices are not fluctuating much, then it is difficult to make enough profits.
- The mentality of a trader- A trader always has a different mentality when compared to an investor. So, whenever you are starting with intraday trading, remember that you cannot keep your long-term goals in mind. Your mindset should be of a trader and focus on gaining more in a lesser span of time. You should be quick in making a decision and always on your toes. You also have to keep a very close eye on the market.
- Always put a stop loss- Stop loss, as the name suggests, is used to minimize your trading losses. Know the way to set stop loss in intraday trading and prevent losses in the volatile market.
Apart from these tips there are some specific points that a trader should generally keep in mind when they are just starting with the day trading.
If you are also a beginner in intraday trading, you must look into some specific conditions like:
- Learn intraday trading
- Choosing the right stockbroker
- Intraday trading charges
- Intraday trading strategies
- Apps for intraday trading, etc.
So, let’s dive into the details to get better idea of how to start intraday trading as a beginner.
Intraday Trading Books
If you are looking for the best guide for day trading in India, then it is important to focus on learning. These days there are multiple resources for the same but what suits better for beginners is intraday trading books.
With the basic to advance intraday trading concepts, these books guide you with all the major and minor market moves that ultimately help you to take the right position in the market.
Most of the books are written by foreign authors but if you are looking for a specific Indian share market guide then you can refer the book like:
1. How to Make Money in Intraday Trading by Ashwani Gujral
One of the best stock market books by an Indian author covers the three important concepts of money management, methods, and mindset of intraday trade.
He guides the reader by providing examples from real trades and discussing the fruitful strategies that can help a trader in maximizing profit.
2. A to Z Share Market by Gautam Kumar
Another useful and important book on intraday trading that provides a complete and in-depth understanding of the market right from the scratch.
For intraday traders, there are two important aspects, identifying the trend and taking a position by keeping the risk and loss in mind. In this book, you can gain a clear understanding of both these terms and understand how to use them practically while trading in the live market.
3. A Beginners Guide to Day Trading Online by Toni Turner
A book by a foreign writer who explains the working of the market for intraday trading in a very simple way. The book also explains the techniques of minimizing risk in the trade and guides you on the roller-coaster ride of the market.
To enhance your understanding the book also contains quizzes and tests that help you in testing your knowledge and then applying it in the market to maximize your profit.
4. The Truth About Day Trading Stocks By Josh DiPietro
Every trader enters the market with the mindset to make a huge profit, but fails and eventually quits. So, how to overcome failure? The simplest way is to learn and understand the technicalities of the market. Right?
This is what you can understand and learn in this book. Not only does the book guide in making a profit but also helps you in building the skills to manage your losses.
So, if you are a beginner then this is the book that is highly recommended.
5. Intraday Trading for Dummies By Ann C. Logue
Another great publication on Intraday trading helps a trader in learning of skill of patience while trading in the market. A trader should be calm and away from emotions while making a trade decision.
It guides you on how to make a calculative decisions and earn profit in the intraday trading without making any decision in rush.
Best Stockbroker for Intraday Trading
Whenever you start your trading journey in the stock market, you need a Demat and a trading account. Since this is the base for trading, it is also vital that you choose the right stockbroker.
So what describes the broker to be the right one for you?
Well, it starts with a seamless account opening process, advanced trading platform, multiple charts and indicators for stocks analysis, and lots more.
No doubt you need to do proper research to pick the right broker, but there are few like Angel One that makes your trading experience seamless and convenient. With Angel One Mobile Share Trading App you can buy, sell and trade on the go.
Angel One is one of the renowned names in the stockbroking industry. Opening a Demat account with them can be beneficial for intraday traders as they have no account opening charges and no AMC for the first year. On top of this, they also provide research and advisory that can help beginners choose the right stock.
Therefore, when you choose the right stockbroker, more than half of the work becomes more manageable.
Intraday Trading Charges
The next thing that a trader always looks for is the intraday brokerage charges. It is an essential point for consideration. The minimal the brokerage charges, the more beneficial for the traders.
Usually, the full-service brokers have higher brokerage charges than the discount brokers. This is due to the fact that full-service stockbrokers have a better range of facilities. But in recent times, a lot of hybrid brokers have emerged that give the same facilities for a lesser price.
The brokerage charges of full-service brokers can range anywhere from 0.25% to 0.5%, whereas it is ₹10-₹20 for the discount brokers.
So, choose a stockbroker that has lesser brokerage charges so that you can maximize your profits.
Intraday Trading Strategies
The most important thing for the beginner is to look for the right strategy that can help traders in making the trade profitable and less riskier.
Here are some of the common strategies used by the trader for intraday trading:
Momentum Trading Strategy
A momentum trading strategy, as the name suggests works with the momentum of the stock. So, once the stock gain momentum it brings in the opportunity for intraday traders to get into the trade.
The traders generally look for the specific price point where they can buy the share and makes the selling decision when the stock starts losing its momentum. Ina ll the trader needs to stay aligned with the volatility of the stock to get the best profit out of the trade.
Breakout Trading Strategy
Breakout trading strategy is specifically trading at the price at the earliest point of the trend. So for taking a long position, traders keep an eye on the support level and make a trade, when the stock price breaks its support at the high volume.
Similarly for shorting the breakout at the resistance level brings in an opportunity for the traders to take a sell position.
However, to understand the trend completely it is equally important to consider other technicalities as well for which using the strategy along with the technical indicator can help you in making a decision.
Moving Average Crossover Strategy
Moving Averages says a lot about the upcoming trend and stock price in the share market. In general, the price moving above the moving average gives the signal of the uptrend.
But here using two moving averages of the different time periods and determining their crossovers makes it easier to make a buy or sell decision.
In this the trader generally pick the moving average of two different time period let say 9 days (fast-moving average) and 26 days (slow moving average). When the fast-moving average crosses the slow-moving average from below it gives the buy signal.
Using this strategy thus helps you in doing proper analysis and making buy or sell decisions for intraday trading.
There are many more strategies for intraday trading, it is all about what works best for you. Pick the one and it is highly recommended to stick to the one that provides you maximum benefits.
RSI Strategy for Intraday
Last but not the least, when it comes to intraday trading, the RSI indicator is the one that every trader prefers to use.
Thinking about how to make the best use of the RSI indicator to make the best out of the opportunity?
Then here are some of the guidelines.
- Choose the 1 minute time frame.
- Pick the indicator with the smaller RSI value (RSI5 or RSI8)
- Look for the divergence.
For better results, you can use the combination of two or more indicators.
Technical Analysis of a Stock
After picking the right strategy comes the technical analysis of stocks, that no doubt plays a very important role in choosing the stocks for intraday trading.
Technical analysis is that one area that is of significant importance in terms of intraday trading. Now if you are thinking about how to do technical analysis of stocks than you can begin with technical indicators that help intraday traders to:
- Pick the right stock
- The correct entry and exit point
- Determining where to put stop-loss
There are various technical indicators that can help an intraday trader.
Some of the indicators that can be used for intraday trading are:
- Relative Strength Index
- Moving Average Convergence Divergence
- ADX Indicator
- Bollinger Bands
Knowing about these indicators is good but what is more important is to learn how to use them for technical analysis.
Begin with the simple one like RSI and then move towards the one that is complex like ADX but gives better and strong signals.
You can learn how to use ADX for intraday trading to understand it in a better way.
Now to enhance your learning and to understand the technical aspects of the market in a better way you can read some of the best technical analysis books.
The books cover different and useful aspects of the market that helps a short-term trader in trading in taking a calculative and useful trading decisions.
Intraday Trading Apps
Apart from all the tips that we talked about above, it is also crucial that you are using the efficient and one of the best trading apps in India. The features that make an app great for intraday trading are listed below.
- The app should have a good loading speed because it makes sure that you don’t face any difficulties while placing an order. Sometimes a trader gets stuck while executing an order and thus losses the potential profit.
- There should be technical indicators and charts present in the app. Technical analysis, as we discussed before, is an essential part of intraday trading. Angel One has around 120+ technical indicators that help a trader in choosing the correct entry and exit point for a trader.
- Research tips also form an essential part of the app for beginners. Moreover, the proper research tip can yield significant profits.
Keeping all these points in mind, even a beginner can make good profits in intraday trading.
How Much Money is Required for Intraday Trading?
So, we discussed about the tips, rules and strategies, but here comes the question of the capital requirement to start intraday trading.
This becomes even more important for beginners who think that high investment can give them higher profit, which is actually not correct. In all, starting small and understanding the stock market before investing huge capital is what the beginner must consider.
So, the one myth that needs to be busted is that a trader requires a large sum of money for intraday trading. If you are just starting intraday trading, you can start with as minimum as ₹1.
However, it is advisable that you invest at least ₹5000-₹10,000 in the beginning so that you can make good profits.
You can carry out intraday trading across various segments including, equity, commodity, currency, and even the f&o segments. It is, therefore, evident that your capital requirement will also depend on that.
So, you should invest according to the risk that you are willing to take. For example, suppose Anil and Vikram both invest ₹6000 for the first time for intraday trading.
Anil buys the stock of company A, which costs ₹100 per share. He then sells it for ₹120 per share. So the profit that he was able to generate from this entire trade is ₹1200.
On the other hand, Vikram purchased the stocks of company B, which cost ₹200 per share. He then sold the same at ₹230 per share. The profit, in this case, will be ₹900.
So, as we can see that the overall profit was not the same even though they had the exact investment amounts. This is because it all depends on where the capital is invested and not on how much money is invested.
Intraday Trading Profit
After that, we have had a look at how much money is required for intraday trading, and it is also essential to know how much profit can be earned as a beginner doing intraday trading.
The profit you generate in intraday trading depends on your entry and exit point, the stocks you pick, and the broker that is assisting.
It also depends on the market fluctuations. Someday, some sudden news about the stock is announced, the stock prices can show a rapid movement.
Jatin bought 2000 shares of a company QPR at a price of ₹200/stock. On the same day, the costs of the same stock increased and reached ₹250/stock.
Since Jatin was doing intraday trading, his profit, in this case, was ₹1,00,000.
Although he will have to pay some charges like brokerage charges, transaction charges, STT charges, stamp duty charges, etc.
Therefore, the overall profit will be calculated as ₹1,00,000 minus all the additional charges.
Now how can you maximize the profit even after paying the commission and taxes?
Well! by choosing the stockbroker with the minimum charges. It is therefore recommended to do the in-depth research of the stockbroker before stocks to end up making profit in the intraday trade.
Is Intraday Trading Safe for Beginners?
Another important question that comes to mind when talking about intraday trading for beginners is, is intraday trading good for beginners?
The answer is yes, but provided that the trader is careful and willing to take some risks. Beginners should enter the horizon of intraday trading because it has higher return potential, great learning chances, not a lot of capital, and excitement.
It is also important to note that the risk is more in intraday trading, so the trader’s risk appetite should allow them to begin this journey.
Intraday trading demands full attention during the market sessions. So, it is crucial that you are not distracted by any other work between the market sessions.
And in the end, it is vital to use the right strategies and follow the intraday trading tips so that your journey stays smooth.
Conclusion
There is nothing a beginner trader cannot do, and intraday trading is also included in that. Having the right vision, knowledge, and skills can make even a beginner intraday trader make significant profits like a professional one.
So, if you are a beginner and are afraid of intraday trading, then you should not be. Just make sure that you are trading, keeping in mind the profit you are aiming for and the risk you are willing to take.
Start trading today by opening a Demat account with the renowned stockbroker. Get in touch with us and we will assist you to choose the best broker with maximum benefits.
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