First, trading is leveraged in many ways, and today a lot of them find varied objectives towards being a trader.
“You can be free. You can live and work anywhere in the world. You can be independent of routine and not answer to anybody.”
– Alexander Elder
If it has all of these pros to it, there are many who would want to get a hold of it through thick or thin, but if it was as easily done as it is said, things would be quite different, and you would not be reading this piece. Trading involves a lot more than just speculating, doesn’t it? It involves choosing the right stocks, analyzing the markets, learning to read technical charts, and so much more. Traders are always people who base their profits on different kinds of purposes, it can be a long-term investment, a gradual purpose, or it can be a short-term process, with much like quick gains. One of these quick gain methods winds up to intraday trading.
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What is Intraday Trading?
Intraday trading is when a trader buys and sells stocks on the same day. Let us say a person buys a stock, and the portal specifically mentions ‘intraday’ . It enables the trader to buy and sell the same number of stocks of the very same company on the same day before the market closes. The ultimate purpose here is to earn profits from the market indices, where it is also called Day Trading.
Yes, we know long-term investments can bring you a great return, but how would Intraday Trading do that, right? You are most probably wondering if a day could even get you any return, but the true fact is that it can. Just say you buy a stock worth $250 in the morning, and the same stock can turn to $300 in an hour’s time. On the other hand, the stock that I said can turn $300 can also turn into $200. You know where I am getting at. Just like any other trading strategy, intraday trading also has its pros and cons, but it lies in the trader’s hand to handle it well and to know how to estimate the market.
The Most Commonly Followed Intraday Trading Strategies:
HFT(High-frequency trading): These are the strategies that use sophisticated algorithms to exploit the small or short-term market inefficiencies.
A News Based Trade: This strategy typically involves trading opportunities from the heightened volatility around the news events.
Range Trading: It primarily uses support and resistance levels to determine whether to buy and sell decisions.
Scalping: This strategy makes attempts at numerous small profits or small prices that change throughout the day.
Features of Intraday Traders or Day Traders:
It is more than a hobby for professional traders. It is a way of living, no doubt. They are also the ones who are typically very well established in the field. In order to be a successful day trader, they need a few prerequisites:
A 360° Knowledge and Expertise of the Market-
Do you know who are the ones who lose a lot of money in trading? It would typically be the ones who attempt the market without any knowledge about it or do not merely know the fundamentals. Though you know technical analysis or the skill of reading charts, without an in-depth understanding of the market, charts, and analysis can be only a deceiving factor. A day trader checks off-market knowledge on the list first.
Often in day trading, you need a lot more capital than usual. You need to have a margin that would suffice. Moreover, it is also necessary to note down so that you do not go down in financial ruin. You need to lock in enough capital for the day simultaneously, it has to be capital that you can afford to lose. It can protect one from downfall and also eliminate any sorts of emotional attachments.
Some of the common strategies are already mentioned above, but becoming a day trader without a solid strategy is more like jumping in headfirst. Every investor has a strategy for the long term, but most importantly he has time to think because obviously time is on his side, and honestly, he has a lot more of it. The same cannot apply for a day trader, a day trader has one trading day, so would you attempt that day without a legitimate strategy?
As a day trader, you will be dealing with stocks that move. When you are holding moving stocks in your hand and want to get to success, the first thing you need to think about would be to channelize these stocks with discipline. Discipline is something that would lead you to success. When you have discipline at par, attractive stocks, quick moves, and so much more become easier for you to handle.
Should you be an Intraday Trader?
Let me break the ice to you, day or intraday trading is a difficult task, a very difficult one actually. Firstly, you need to bring yourself to the trading world with a good idea of the market and your risk tolerance. Just know that:
It is Time Consuming: You hold the responsibility of perfecting your strategies, you take up a course, you analyze your capital, know what you can afford, and how you are going to do this. You have a lot of time tied up with this process. It is more like you devote this time before you could jump into the daily waves of trading.
You will Start Small: If you decide day trading is your thrilling ride of saving your capital and making money, you will be starting small, and the returns would also be comparatively smaller. You and I both know you cannot complicate your trading strategy in the very beginning and meet big losses.
It is your Job to Keep it ‘Cool’: You need to keep emotions out of your reach as an intraday trader. The more you can stick to that and color inside the lines, the more successful your plan can be. Keeping a level head helps you maintain your focus while you keep the path selected.
Intraday trading is a viable way of earning a profit, though sometimes it is traditionally controversial. Also, day traders are an integral part of the market, and they keep the marketplace efficient and liquid. For traders who know they have the fundamentals set, it is a place where profits can flow at a really fast pace.