The word “Intra” can be understood as “within” or “on the inside”. If we go by the word “intraday”, it means within the day or during the same day. The word “intraday” is often used in the financial world. It is used while discussing about market trends. In reference to individual stocks and stock market indices, intraday is referred to as trends in a single trading day. For example, the price of a stock of a Company A may change throughout the day. It is priced at, say, Rs.250 at the start of the trading day, falling to Rs.220 by noon and then rising to Rs.240 at the end of the trading day. These prices are called intraday prices.
Some Information on Intraday Trading
Intraday trading in the stock market refers to the buying and selling of various financial instruments within the same day. At the end of the day, all positions are normally closed before the closing of the market for the trading day. Traders who are involved in day trading or intraday trading are called day traders or active traders. Though, this type of trading is simple and rewarding, it requires you to be very quick and fast. You need to be on your toes every moment and so there are certain rules and regulations which you have to keep in mind.
There are some short-term trading in which a trade may last for just a few minutes. Most of the day traders focus on such short-term trading because the risk in them is less. There are some intraday traders that focus on price momentum, some on strategies they feel can be profitable, and still others on technical patterns. Intraday trading can get you either huge percentage returns or huge percentage losses. Hence, traders who do day trading are considered as gamblers by other investors.
Some traders start as soon as the stock market opens. This poses some risk because you have entered the market without knowing the trend of today’s stock market. So, it is best to enter for intraday trade after 30-40 minutes when the market opens. Also, do not put in all your capital at one go. Enter in some small quantity and later buy more in the next 10 to 15 minutes after observing the stock market movements.
Advt – Intrday Trading Tips
Some Intraday Trading Strategies
In order to gain huge profits, there are many intraday trading strategies. Day trading can be a very risky business. You might have to suffer huge financial loss if proper strategies are not followed. These tips and strategies become more important for beginners who have less experience in stock trading.
One of the intraday strategies is trend following. The decisions on trading are taken in the basis or trends being followed. The day traders buy the financial instruments on the assumption that the financial instruments are continuously rising. Before the closing of trading hours, he/she sells these financial instruments in order to make profits. There is also a strategy whereby a day trader short sells financial instruments when their price is continuously falling. Meaning to say, the day traders borrow the financial instruments from his/her broker with the hope of buying them back before the closing of the day.
Another day trading strategy is news playing. Intraday traders rely on the news from some publicly listed companies. On bad news they short sell their stocks. They sell the stocks after borrowing them from their brokers. Later, before the end of the trading day, they but the stocks again and make a profit if the price of the stocks is lower than the price at which they had sold them earlier. On good news, they buy and sell the stocks at the end of the trading day. This strategy is very common and is used by almost all day traders.
Intraday trading is very profitable but it also involves the highest risks. It can make you rich in a single day and can also bankrupt you on the same day. So, it is said that intraday trading is for the experienced and adventurous traders who understand every movement in the stock market. Intraday trading strategies help a long way in minimizing financial risk involved in this type of trading. Every beginner and experienced day trader should follow these strategies.