Intraday trading is the process of trading in various securities such as stocks, commodities, currencies, etc on the same trading day. The main objective of intraday trading is to earn quick profits from the short movement of securities. However, before opting for intraday trading, make sure that you have obtained adequate knowledge on intraday trading, how to analyze sensex today live chart, how much risk you are willing to take and use the right risk management strategy. In this article, we are going to learn about intraday trading, the pros and cons of intraday trading, and intraday trading tips for success.
What is intraday trading?
Intraday trading is a way for investors to make short term trades in the stocks, currencies and commodities markets within a few hours of the current day’s market close. This type of trading is popular among institutional investors and high-frequency traders because it allows them to make quick decisions and capitalize on short-term movements in the markets.
Pros of intraday trading
- Intraday trading allows you to take advantage of short-term price movements. This means that you can make more money by trading in volatile stocks than by investing in stable, long-term stocks.
- Intraday trading is less risky than investing in the stock market overall. This is because stock market fluctuations can be extremely costly, and intraday traders are less likely to lose money than investors who invest in the stock market over an extended period of time.
- Intraday trading includes the potential for greater profits.
Cons of intraday trading
- It includes the potential for greater losses, and the reliance on quick decision-making.
- Intraday traders should be prepared for frequent changes in market conditions, as well as the possibility of sudden swings in prices.
- Intraday traders should also be aware that intraday trading is inherently risky, and should only pursue it if they are comfortable with the associated risks.
Intraday trading tips
- Set realistic stop losses. Don’t put all your money by blindly trusting your technical indicators or gut feeling when it comes to choosing stocks to trade. Always set a stop loss if you’re not sure you can hold onto a position for the full day. This way, you can avoid any losses if the stock goes against you and still have some money left in your account at the end of the day.
- Stay disciplined. One common mistake made by intraday traders is allowing their emotions when trading.
- Use technical indicators cautiously. Technical indicators can be helpful in determining whether or not a stock is overvalued or undervalued based on historical data (or current trends). However, don’t make your trading decisions based on the technical indicators, instead use them as supplementary information to help make informed buying and selling decisions.
- Use Fibonacci retracements as one tool for risk management. Fibonacci retracements are technical indicators that help identify support and resistance levels in markets (and can be used as predictors of future price movements).
Conclusion
Intraday trading is a great way to earn quick returns in a day. However, you need to keep in mind that intraday trading is highly risky. So, make sure to analyze how much risk you can take, use technical indicators/tools and understand the various terminology of intraday trading.
