Investing has become a necessity today, due to the growing need of becoming financially independent and earning a steady income over some time. If you are interested in investing, there are so many options to choose from. But when you talk about earning quick money, it is possible with a concept called intraday trading. In this concept, the individual buys and sells securities within the same trading day, which is just before the market closes for the day. So clearly it involves instant buying and selling of shares. Though it has been in the market for some time now, still many people have no idea about it. Unlike long-term trading of stocks, where you buy a share and sell it at your own will, intraday trading is a fast way of making money, that is the reason why most young investors have made intraday trading their side hustle.
But you cannot step into this field without gathering enough knowledge about trading, so make sure to learn about it beforehand. Talking about the best way to learn about intraday trading, it is surely taking up the best intraday trading course available to you, and making its best utilization by learning every possible thing about intraday trading and how the whole market operates. It will help you in learning a lot about the tips and tricks that can help you earn great profits in the long run. Following are some of the few basics related to intraday trading, which will provide you an insight about it:
- Look for liquidity of shares: Whenever you think about investing in intraday trading, it’s important to make sure that you only choose the highly liquid stocks or the ones which have a high trade volume. It’s better to choose a few large-cap shares, rather than opting for mid or small-cap shares, the reason being the low amount of liquidity associated with the latter. In intraday trading, you need to buy stocks that can be sold quickly, which is not possible with mid or small stocks, because you need to retain them for a long time before getting the chance to sell them.
- Decide your entry and target price: Intraday trading is all about tight timing, and once you miss it, you may be at a disadvantage. Whenever you enter into the market, you need to be clear about the maximum price that you expect the share to achieve, only then you can be confident about the rest of the moves. Wait patiently until that target price is reached, and then sell it. If you do it before time, you are bound to suffer losses. Therefore, proper setting of entry time and target pricing is required.
- Make use of stop loss to limit losses: Stop loss is a tool through which your stock automatically gets sold once the price reaches below the minimum level. It is an effective way of measuring the amount of loss that you have occurred due to price deviation. It works wonderfully to help you save your hard-earned money from getting lost. If you are a new investor who doesn’t want to suffer huge losses, stop loss is the right choice for you.
- Do your research: Before actually getting into intraday trading, you need to wishlist the stocks that you will be investing your money in, and study everything about them. Whether it be any latest news about them, their IPO, merger or acquisition with other company, management changes, etc. You need to know about everything. This will not only help you to know the company better but also help you to earn a great number of profits in the long run. Constant invigilation of the stock will help you learn about the way it behaves along with a change in market conditions.
- Don’t get greedy: Once the target price is reached, you should stop your trading there, and sell the share immediately. Don’t think about earning more profits, in case there is a further increase in the price since the reverse might happen anytime soon. But in case you have the gut feeling about the price going up, you can make changes in the target price accordingly. You have full control over the target price that you wish to set for your shares, just keep in mind to book the profits once the target price is reached.
- Get information about intraday trading indicators: These are specialized tools that help in maximizing your profits in the best possible manner. Some of the commonly known indicators include moving averages, momentum oscillators, Bollinger bands & Relative strength index. While these tools may just seem to be simple lines going up and down the graph, but they provide a lot of insight into the stock price.
Learn more about intraday trading with the help of the best intraday trading course available on FinLearnacademy, it provides you a deep understanding of the stock market and how you use the basic and advanced intraday trading strategies to your benefit.