Intraday Trading

Intraday Trading Tips

What does trading in share market mean?

Most of us hesitate to trade in share market. And it is mainly because of unnecessary fears and doubts. In this article, let us know how to do trading first, especially intraday trading in share market and best intraday trading tips as well. Trading refers to the act of either buying or selling shares and it is usually done to make profits in a very short time unlike an investor who stays invested in the share market for a very long time. All trade transaction happens over the exchange and a broker acts as an intermediary between you the exchange.

Why does one trade?

Shares are sold by companies to the general public for want of capital. Traders buy and sell shares in the secondary market. Markets move up and down and so do stocks. “Buy low and sell high” is what most of the traders follow while trading. Buying shares at a low price and later selling them at a higher price results in profit. Speculation is what makes the market move. For example, if a trader feels that the price of his share may go up due to some reason, he or she buys that stock at a low price and when the actual news regarding the share is out, sells the share at a higher price cashing in on the demand.

A trader has to keenly observe the markets to take the right decision regarding buying, selling or holding the stock. As an investor, one is more inclined to analyze a company fundamentally by knowing the company’s EPS, PE ratio, sustainability of the business, etc. Whereas a trader gives more focus to the technical aspects of the company. There are technical charts based on minutes, hour, etc. that will let you understand how the stock price moves.

Some people take up trading as their profession while some do it as their part time passion. Loss and gain are part of trading; so one has to trade with confidence backed by good strategies. Markets react to various factors such as economic data, political uncertainty, trade wars, etc. and traders make profit by cashing in on these trends. cks either give high returns or give negative returns.

What are Defensive Stocks?

Defensive stocks are not affected by the performance of economy. They provide regular dividend income. These stocks help you to protect your investments during times of recession. If you are a very conservative investor whose main priority is safety, then you can choose to invest in defensive stocks. You cannot expect extraordinary returns from defensive stocks as they simply function as safe haven stocks. If you are a newcomer to the market, you can start investing in these stocks in the initial phase as volatility is less and these stocks won’t give you sleepless nights. Defensive stocks give stable returns at all times irrespective of the economy’s performance.

An investor’s portfolio should have a mix of both cyclical and defensive stocks and only this will help in mitigating risk and reduce loss.

Who can trade?

Anybody can trade and usually people who are risk takers prefer to trade rather than investing as it is usually done for wealth creation with a long-term approach. Those who wish to get a regular income or safety of capital don’t venture into trading. As risk is high, returns are also high in trading. One should not worry about committing mistakes while trading. As only these mistakes in due course of time will make you an expert.

                                                    

What do you need to trade?

You need a demat and trading account to carry out trading in the share market. This account can be opened online easily with any of the SEBI registered brokers or depository participant.  is the one that stores your shares in electronic format, and you can transfer money from your bank account to your trading account to buy shares. Usually, the settlement i.e. crediting of shares or money and debiting of shares or money takes place in 2 days which is why it is called as T+2 settlement.

Important assumptions one must know while trading:

1. Price discounts everything:

This means that the market price of a stock reflects various information such as political news, macro and microeconomic data, etc.

2. Price move in trends:

The stock price will suddenly not move in an erratic fashion; it usually follows the same pattern.

3. History tends to repeat itself:

As markets are driven by fear or greed, patterns of stock price movement usually tend to repeat.

How to reduce loss while trading?

Stop loss is one of the strategies that must be used while trading. This will help you in reducing your loss. By this strategy, your stock gets sold if it reaches a level below which your losses will be even higher.

What is intraday trading?

A trader buys a quantity of a stock and sells it on the same day itself in intraday trading. It is associated with high risks and gives high returns as well. Let us learn about intraday trading rules now.