WHAT IS INTRADAY TRADING AND HOW TO DO IT?

This article explores the definition of intraday trading and its methodology. Popular indicators for intraday trading which are frequently used to analyze the trend are given in the article.

If you are an avid trader or wish to be one, you might have come across the term Intraday Trading. Furthermore, a question of What is Intraday Trading? And how to do it? arises in your mind then this article attempts to clear your doubts.

Stocks are bought and sold on the same day that’s what intraday trading is all about. It is one of the most lucrative trading strategies, which is preferred by avid traders. The life of the transaction of the stock in intraday trading is that of the market hours. In the event of failure of sale of those stocks which you have purchased during the market hours in intraday trading the result is squaring off your position for the transaction or it might be converted into delivery trading. Not just the question of What is intraday trading is answered but also the factors which can sway the prices of the securities are also explained.

What is Intraday Trading?

Intraday trading, as stated above, is the simple buying of those securities on which you think you will earn profit by selling them on the same day. The price of securities fluctuates every minute. The candlestick that is a trend oscillator creates a candlestick every three minutes. Now you can imagine how frequently the price varies. To draw from these fluctuations is the beauty of Intraday trading.

What do you need to start Intraday Trading?

You may open a trading account on any online trading platform thereafter start trading!

Usually, a Demat account is created first. To place trades you require both accounts- Demat along with a trading account. While a trading account is handled for trading, a Demat account means to hold the securities electronically. Though, it is easy to say, open an account and start trading, the process of intraday trading is a lot more complex. You may open a trading account on your choice of the trading platform which is available online.

To start intraday trading one does not need a huge amount of capital, just the knowledge of analysis of technical trendlines of intraday trading. Moreover, the ability to take risks is required. The stock market is sensitive to umpteen factors, thus price fluctuations are so common. Thus, it is crucial to be willing to take risks.

You need to stipulate your wish for intraday trading to your broker and you are good to go. You should first do thorough research of the market and study the interpretations of the indicators if you wish to start intraday trading yourself.

Technical Analysis for Intraday Trading

The key to intraday trading is quality interpretations of the trendlines. Understanding the pattern of the momentum of the market and the fluctuation of the prices is vital. Thus, trendlines are used for the technical analysis of the momentum. The conventional trendlines that are popularly used for Intraday trading are RSI- Relative Strength Indicator, Candlesticks, Moving averages, On balance Value, and add ons.

These indicators help in analyzing the momentum of the market. Thus indicating a buy or a sell in the stock. RSI and candlesticks are the leading indicators that suggest the momentum of the market. The two trends of the market are bullish and bearish. Bullish means the prices are escalating and, bearish is the opposite of that. A bullish trend yields profit and a bearish trend result in a loss. Intraday trading is not limited to the indicators and analysis of trendlines. The stock market is also affected by external factors such as news, inflation, and add ons.

Other Factors in Intraday Trading

Moreover, factors such as the performance of the company on a yearly, half-yearly, or even quarterly basis can affect the price of its securities. Securities prices are affected by the anticipation of a company’s performance when it announces its performance. Now you may imagine how greatly the result of the performance can affect the prices. Other factors like earthquakes, tsunami, terrorist attacks can also potentially influence the stock market. After the tragic event of 9/11, the stock market across the globe was affected. Most of the stocks crashed which rippled the stock market. The effects of external factors could last for days.

Conclusion

Since intraday trading has the ability to yield substantial profits within a given day, it is preferred by many investors Moreover, the online trading platforms provide the technicals and price analysis weaving an easy path for beginners to start trading, they can refer to the analysis and make their choice of stocks. In addition to these, a large amount of capital is not required for intraday trading. Therefore, intraday trading could be an easy choice for you if you wish to earn that extra capital.