Many aspiring stock traders spend time looking for stock trading mantras. In reality, no mantra can help you become successful overnight. But you can adopt some time-tested methods to become an expert in online share trading.
For instance, keeping your costs low is a key to success in intraday trading. To ensure this, you can use measures like breakouts, supports, and relative strength, among others. The challenge is to make profits consistently, which requires practice and dedication to looking for good intraday trading opportunities.
If you are willing to put in the time and effort, the following pointers could help you to find success as you explore intraday trading for beginners.
- Be realistic about profits
The stock market can feel like a puzzle at times, and being wildly optimistic about your chances for making money could lead to your downfall. For instance, many newcomers hope to achieve a 2x return on their capital right away. This pushes them to use excessive leverage, which may eat into their trading capital if the trade goes wrong. Rather than be overly optimistic about making huge returns overnight, focus on growing your capital slowly and steadily.
- Back-test your strategies
Every trader has their online share trading strategy. As a beginner, you too must focus on developing a strategy. A crucial part of this exercise is to back-test your strategy using historical data. You could also use common parameters such as profitability percentage, holding period, and risk-reward ratio to carry out the back-testing. This will help you to assess the viability of your trading strategy. The broker’s trading terminal may allow you to conduct the back-testing.
- Learn, learn, and learn some more
It is often said that a trader’s edge lies in their knowledge. The more you learn, the more successful you will be. Educating yourself will help you get a new perspective and improve your trading style. You can take the help of online resources that offer trading tips, advice, and guidelines.
- Pay attention to volume
Since intraday trading depends on speed and exact timing, stocks that show high-volume activity are a better choice. You have more opportunities to enter and exit such liquid stocks under favourable conditions. Even if you trade larger quantities, the high volumes keep the prices at a manageable level. You can easily square off your positions by trading two to three stocks that show high liquidity. It may also help to examine a stock’s liquidity at different price levels.
- Stick to the plan
Moving fast is an important skill for professional day traders. They ensure this speed by planning their moves in advance, being disciplined, and sticking to their strategy. In day trading, following your plan crucial for making profits. In fact, there is a popular saying among day traders: ‘Plan your trade and trade your plan.’
- Go with the flow
The stock market keeps moving in waves. As a trader, your job is to ride those waves. During an uptrend, you should aim for long positions. Meanwhile, in a downtrend, it may be best to go for short positions. But the trends keep changing. So, you should be on the alert for sudden reversals as well.
Intraday trading takes practice, diligence, and research. Always trade an amount that you can afford to lose and learn to be patient when trading in the stock markets. If you need expert help, it may be a good idea to open an account with a brokerage firm like Kotak Securities. Established brokers offer a range of educational resources, trading apps, and products to simplify your trading experience.