Intraday trading offers a very good tool to make quick money in financial markets. But if it is done without proper plan and research, it can lead to significant losses also. Here are some stock markets intraday trading tricks which will help you make decent money by intraday trading.
Important Intraday Trading Tricks
Study Technical Charts – If you want to make money in intraday trading, make habit of studying technical charts daily after the market closes. Look for any breakouts or breakdowns from a trend line or some technical pattern.
Breakouts and breakdowns suggest a trend in the prices which is likely to continue the next trading session also. Trade is initiated as close to the breaking point as possible. Stop-loss should be above or below the previous day’s high or low for long or short trade respectively.
Learn to identify the Short Term Candlestick Patterns on daily technical charts. There are plenty of such patterns. To name a few are like Bullish/Bearish Engulfing Candlestick, Shooting Stars, Hammers, Doji, Three Black Crow or Three White Soldiers.
Each of them gives you some insight regarding how the stock markets may behave in short term or Intraday Session.
You can study all liquid stocks or make a list of your favourite stocks to study. But reading the charts daily is a must. Candlestick charts are the most informative and popular charts.
Studying Hourly candlestick charts can be more useful after reading the daily candlestick charts. They guide in more accurate entry or exit for an Intraday trade.
Always take the help of Technical Oscillators to strengthen your opinion. You can add a Stochastic oscillator to the hourly chart. Initiate a trade only when the crossover occurs after prices have reached an oversold or overbought level.
Define your trade entry point, trade exit points (target price or stop-loss price) on the basis of technical analysis, for both kind of trades i. e. Long as well as short trades.
Identify the Trend – Now carefully identify the trend in the market ; short term trend and intraday trend. Follow the trend and choose the stock from your list accordingly.
If both the trends ; short and intraday are in the same direction, then you can take aggressive trade position according to your risk appetite. If both the trends are in opposite direction, then you should be careful or avoid intraday trading to avoid unnecessary volatility and losses.
Trend is identified by looking at the highs and lows made by the stock prices. Higher highs and higher lows indicate uptrend. Lower highs and lows indicate downtrend. When there is no clear trend, then it is sideways.
Stick to your Trading Plan – Stick to your trading plan. Your plan is based on technical analysis as in step 1. This avoids emotions of fear or greed coming in your way of trading.
Strictly follow the Stop-loss and apply it as soon as you enter the trade. This ensures timely exit of the trade in case of unfavourable market moves.
When the trade turns to profits, look to exit the trade near your target price or when you have decent profit though the trade is not moving towards your target price.
In any case, profit of 1% is considered a decent profit in intraday trading. So, look to exit the trade wisely as no one knows when the trade may start reversing.
Avoid Over Trading – Over trading can kill a trader. Never enter a trade thinking to cover the losses of a previous trade. Take every trade as a new opportunity.
Before you enter a trade, always have a rough calculation regarding how much a profit that particular trade can give you after subtracting the brokerage expenses. Take a trade when you can expect substantial profit with lesser risk. Otherwise avoid that trade.
To conclude, Intraday Trading is an ever learning process. You learn more and more from each trade. Just keep following these basic intraday trading tricks.It is important that in Intraday Trading, you start with small quantity and increase it steadily as you gain experience and confidence.