Most online share trading platforms have features that are designed to help with intraday trading for beginners. You will find charts, news, and market recommendations, as well as educational resources that teach you to reap benefits from intraday trading. If you are keen to master the stock markets right away, here are some dos and don’ts to get you started.
Intraday trading do-s
- Study the market well and follow the stocks you wish to trade in. Learn about the companies and how their shares have behaved in the past.
- Outline your intraday trading strategies. Write down your goals and follow your plan of action faithfully. To be a successful day trader, you will need to be disciplined and diligent.
- Clearly define entry and exit points. Beginners stand to benefit from placing profit targets and stop loss limits on every trade. This ensures that the trades are executed when the price strikes the profit or loss triggers. It allows you to pocket the profits quickly or cut losses depending on how the market is moving.
- Use the various tools that online share trading platforms offer to learn about market conditions and trends. The information can help you to make a better stock selection.
- Choose a trading platform that is robust and fast. If the system is slow, you might end up missing big opportunities because the update came in late or because by the time you clicked the opportunity to cash in was lost.
- Look for a brokerage firm that has low fees. Day traders make several trades each day. If you were to incur high brokerage fees and other charges on each transaction, the costs could eat into your profits.
- Trade stocks that are highly liquid, such as stocks of big and established companies. Liquid stocks see a lot of market activity. So, you should find enough opportunities to enter and exit positions profitably.
- Trade with only a part of your disposable money—that is, money that you can afford to lose if trades go bad. Some experts suggest that you trade with no more 25% of your disposable capital. That way, the remaining 75% can act as a buffer in case things go wrong.
- If you are a beginner, start trading with only one or two stocks. It will be easy to track their movements and take the required action.
Intraday trading don’t-s
- Do not get caught in the flow and over-trade on a stock option. Stick to your strategy.
- Do not trade during rush hour. You may see a great deal of activity as soon as the market opens. Avoid that volatile time segment and start trading a little later when the market has settled a bit.
- Do not be led by greed to earn more on a chance occasion. Also, do not flee a position before time because you are afraid. Greed and fear are detrimental to the day trader.
- Do not expect that every trade you get into will bring profit. Many intraday traders make money from only a few of their daily trades, especially in the beginning.
- Never trade a stock based on rumour or speculation. Base your decisions on your market studies and trading experience.
- Do not trade if you are unclear about where the market is headed or if you see it stagnating. Sometimes, deciding not to trade can be a good strategy.
Conclusion
As a beginner in the stock market, you may need to experiment with different trading approaches. Just keep these pointers in mind every time you trade. Over time and with some practice, you should be able to find an approach that works for you. Also, do yourself a favour and open an account with an established broker like Kotak Securities. Bigger brokers offer an array of products and services that can support you through your initial trading days.