Trading Strategy
Trade Intraday refers to buying and selling stocks within a single trading day. Therefore, during market hours, traders profit from price fluctuations.
A trader who expects the price to rise during the day might first buy a lot of securities and then sell at some point during the day. The reverse is also possible, called short-selling.
A trader would short sell in a falling market to profit. Short-selling involves borrowing shares and selling them on the market. The traders then buy shares at the lower price and return them to the lender as soon as the price drops as required.
A High Risk
As day traders take advantage of volatility, they are exposed to great risks. This is much higher than the risks taken by an investor who holds stocks for the long term.
Consequently, trade intraday traders are usually speculators, who are willing to take high risks. By using margin trading, they are able to conduct high-value trades worth lakhs and crores of rupees.
To take advantage of Upstox’s high margins, use Cover Orders and Bracket Orders. However, trade intraday traders can also make significant profits.
Also Read: 20 points you require to remember when you Trade Intraday
Effects of Stock Prices
In doing so, they often affect the price trend of the stock. Consider a stock trading in the Rs 100-102 range. Day traders or trade intraday traders decide to bet on 1,000 shares of the stock.
There is a sudden spike in demand for the stock. This causes the price to rise marginally. Traders sell their shares as soon as they reach a certain level. This, in turn, causes prices to drop.
Due to the fact that day-traders are only concerned with the volatility in the price and volume of the stock, these traders seldom examine the underlying company’s financial viability.
Usually, they use technical analysis. In order to forecast future stock prices, historical trends in stock prices and volumes must be analyzed. By analyzing technical factors, you can determine the best time to buy and sell stocks.
The process is usually time-consuming and complex. Day traders, therefore, are typically full-time traders, closely monitoring each and every movement in the stock market.
The Day-Trader’s Guide
In the beginning, it is important to select stocks with a high volume of trade. This is evidence of their high liquidity. A penny stock is a share of a small trade company with a price under Rs 20.
Limit the number of stocks you select at a time to two or three. More stocks would be difficult to monitor. Determine the price at which you will buy and sell – your entry and target prices.
The most important thing is to have a stop-loss order. If so, you’ll be less likely to lose money. When you have placed your order, monitor closely and exit when the price has hit your target or stop-loss levels.
Intraday Trading vs. Delivery
You can pretty much do anything with the stock you buy on a delivery basis. It can be kept for as long as you like, or it can be sold right away. It’s completely up to you.
You can sell stocks at any time you feel the market is high or the value of the stocks you hold is high enough to warrant trading. The stocks you sell in intraday trading must be sold before the market closes.
The outcome can be one of two things in intraday trading. You can sell these stocks at your convenience on some online platforms by converting those stocks into delivery trades and levying a brokerage.
The others just square off your trades at the market price at the closing time, even if you’re making a loss, and you’re stuck with it.