Category: Business

Intraday trading tips, basic rules and strategies:

Intraday trading or a day trading is a type of trading in which buying and selling of any particular stock happens in same day. All positions need to be closed in the same day either in profit or loss. At Eqwires, we always try to give our best guidance and knowledge to our website visitors and beginners. Here we have provided most of the tips for intraday trading which helps beginners to improve their trading skills.

Below are the Intraday Trading Tips for beginners:-

• Breakout: Intraday trading runs mostly on intraday chart patterns. One should follow basic technical while doing intraday trading. If any stock is breaking it’s resistance, you can enter in buy position with appropriate stoploss, same way if any stock is breaking its support, you can sell it with appropriate stoploss. Stoploss can be pivot point or its previous close. 
• Calculating Pivot Points: It is also called point of rotation. To calculate pivot points you can use previous day’s high + low + closing price divide by 3. You can calculate resistance and support levels after finding pivot points. First resistance is 2*P-Low.

Second Resistance is P+ (R1-S1). First support is 2*P-High. Second Support is P-(R1-S1). Basics indicators and charts have to be followed for Intraday Trading.

• Limit your losses: Stop Loss controls risk of your capital. In a short position you can place a stop loss above a recent high, for long positions you can place below a recent low. Also you can change depend on volatility. Stop Loss has to be placed especially if you want to make good profit in Intraday trading by reducing loss.
• Risk reward ratio: Traders and beginners must understand appropriate risk reward ratio. Find stocks that provide adequate risk reward ratio of 3:1 which is beneficial for making profits. This is one of the best intraday trading tips for beginners.
• Trade with Market Trend: Most Important rule for Intraday Trading is to go with Market Trend. As if market is up then try to make buy position and if market trend is down then try to make a short position. 
• Risk involvement: Intraday trading is completely risky so if any person is coming with only profit expectations or with sentiments, he/she should not trade because market will never understand your emotions. Intraday trading is a technique which can be learnt and improved day by day so you have to keep on learning every day.
• Stock selection: Stock selection is most important part in intraday trading so you have to choose stock very wisely.
• Risk Management: Intraday trading involves high risk which can give complete or partial capital loss so there should be risk calculation like 2 to 4% of risk of entire capital in a single trade. Because if your trade goes in to loss, you don’t lose more than that.
• Don’t borrow money: Never ever trade in stock market with anybody’s money. Yes this is most important while trading because I have seen many people who takes personal loan or borrow money from someone and regret after losing that money. You should trade with your own spare money only.
• Keep adequate capital: I have seen many people who make loss just because they don’t have sufficient capital to survive in market like many people trade 5 lots for Intraday in 1 lac capital. I don’t recommend this because sometimes you may get profit but it’s purely a gambling to trade like this. Always put sufficient capital to trade as per NSE margin guidelines and also maintain MTM so that you don’t have to book losses.
• Follow stoploss: New comers don’t follow stoploss and they just keep on holding a losing stock and it ruin your whole capital. Don’t do that. Always cut the loosing position before it wipes out everything.
• Maximize Profit: Many times I have seen that people book 2 rs profit and hold in 20 rs loss. You should always hold profitable stocks with trailing stoploss to maximize your gains and minimize your losses whenever you are in loss. In this way you can gain good profit from market.
• Don’t follow anyone’s suggestions: Many people buy or sell anything because a friend, an adviser or anyone suggested. It may give sometimes profit but it’s riskier too because you can’t earn consistently by just following TV advisers or any friend. So always do your own research before trading or investing. Because learning by yourself is a key to earning.
• Stay cautious: We have seen many times that if everyone is saying that this stock will reach 200–250 level, it doesn’t happen and that stock gives opposite movement. You should follow warren Buffet’s golden lines that be fearful when others are greedy and be greedy when others are fearful.
• Stop overtrading: Many people trade too much in a day and they hold too many stocks at a time which is indication of a disaster. Some are too curious to trade that they put trade at 9:15 AM only and that trade gives losses too many times. One should always wait for perfect opportunity to earn in market because less trading saves profit while frequent trading takes away saved profits.
• Basics of movement: Always try to learn basics of stock movement so that atleast you can get idea about stock’s support and resistances. Always Buy on support and sell on resistances with stoploss.
• Don’t average: Many people buy a stock for an example at 190 and than average at 188 and may be again at 185 and then they have to cut all positions at 180 because of insufficient margin. Don’t average in market because adding loosing positions is always riskier. Better just give up and find other opportunity.
• Don’t love any stock: Many people follow any particular stock or index like it’s their favorite and their friend. Don’t love any stock or index. Just follow basics and trade. Sometimes loving a stock gives us big losses.
• Stop trading and take a break: Stop trading whenever you are losing frequently because it happens sometimes that your all decisions and thoughts are against of market which are giving you losses. So whenever this kind of situations is happening, just stop trading and take a break.
• Not primary source of income: Many people think that this is their primary sources of income and they leave their work or job. I just advise them that never leave your primary source of income because stock market earnings are external source of income and keep it as extra income only. Never make it as a main source because it may harm you and your family.
• Don’t be emotional in trading: Don’t be emotional and sentimental in stock market because market doesn’t understand anyone’s emotions or problems. Don’t expect that market gives you money for any operation, any loan payment or any other sympathy earning. Just be practical and trade.

Risks involved in intraday trading

• High price fluctuations are very uncertain, especially when the market is volatile. Due to this chance, the chances of losing money are higher.
• If you do not have any strategy while trading or can’t stick to one, that could be extremely risky. Trading based on speculation is no less than gambling.
• Most of the time, wrongly timed exit is the main cause of the loss.
• Chances of blunder are much higher when trading related decision are driven by emotions.
• There could be some slippages that you encounter while using technology, and though such risks occur rarely, they still might cause losses.

Best Intraday trading tips and Golden rules for beginners?

There are 09 Golden Rules for Intraday Traders:

Best trading tips for beginners which is very important for Intraday traders. These are the basic rules needs to be followed by Intraday Traders.  

1. After execution of trade always decide and place target for profit and also place stop loss or atleast keep trailing stoploss when it’s running in profit.
2. Never try to recover your losses by overtrading. 
3. If you have earned 10% of your capital then don’t go for another trade.
4. Never get panic while trading as if you get panic then chances are there of taking hasty decisions for which you will regret later on.
5. Always have a habit of modification in target. It happens many times you have placed target and just because of 0.05-0.10 points it won’t hit and you will miss the opportunity. So always modify and take profit.
6. Always have eyes on news, corporate actions, announcements and results. As due to that stocks moves fast.
7. Stop loss is most important. You have to decide your stoploss on both the sides. Always place stop loss according to your risk ability. 
8. If you want to make good profit in intraday then always take trades in different sectors. Apart from that how to select stock for intraday trading is an important question. Buy oversold stock and sell overbought stock so you can diversify your risk.

09) Try to avoid intraday trading when moment is volatile or very high. As there are more chances to occur loss.

Eqwires Research Analyst

Top-notch SEBI registered research analyst

Best SEBI registered Intraday tips provider and Best SEBI registered stock advisory company

info@eqwires.com

Call: +91 9624421555 / +91 9624461555

www.eqwires.com