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How to Profit from Intraday Trading?

Intraday trading encompasses buying and selling equities on the same trading day. Traders want to capitalise from modest price movements in order to create quick returns. To make money in intraday trading, one must understand market volatility, technical indicators, entry/exit points, and risk controls. Unlike long-term investing, intraday trading requires active monitoring and execution of trades within hours or minutes. The entire process of intraday trading hinges on market timing, discipline, and sound strategy implementation. The goal is not holding positions overnight, but closing them before the market ends.

Key Insights Before You Begin Intraday Trading

Market Timing is Crucial

Understanding the timing for intraday trading helps identify volatile market hours. Typically, the first and last hours of the trading session show the highest volatility.

Select Liquid Stocks

Choose stocks with high trading volume, as these offer easier entry and exit.

Use Technical Analysis Tools

Learn to read candlestick patterns, resistance/support levels, and indicators like MACD, RSI, and moving averages.

Avoid Overtrading

Excessive trading can lead to errors and unnecessary transaction costs. Plan your trades and stick to the plan.

Set Target and Stop Loss

Defining your target price and exit point is critical to managing losses and locking profits.

Stick to a Trading Plan

Avoid impulsive trades. Use a systematic approach that aligns with your strategy.

Learn About Brokerage Charges

Consider brokerage and other charges that can impact your overall gains.

Practice with Simulated Platforms

Gain experience with mock trading platforms before risking real capital.

Effective Strategies for Intraday Trading

Momentum Trading

This strategy involves identifying stocks moving in one direction with high volume. Traders enter trades when momentum is on their side.

Breakout Trading

Traders monitor stocks that break key resistance or support levels and place trades in the direction of the breakout.

Reversal Strategy

It identifies when a stock is likely to reverse its current trend. It works on the principle of price retracement and correction.

Gap and Go Strategy

Focuses on stocks that open significantly higher or lower than the previous day’s close. Trades are made in the direction of the gap.

Scalping

This involves placing multiple trades in a day for small profits each time. It requires quick decision-making and low spreads.

VWAP Strategy

Volume Weighted Average Price is used to assess the average price at which a stock has traded. Trades are placed when the price moves above or below VWAP.

Managing Risks in Intraday Trading

Position Sizing

Allocate only a specific percentage of your capital per trade to prevent major losses.

Stop Loss Mechanism

Always set a stop-loss order to automatically exit a losing position. It helps cap the downside risk.

Avoid Leveraging Excessively

Leverage magnifies both profits and losses. Use it cautiously and within limits.

No Emotional Trading

Trading based on emotion often results in poor decision-making. Stick to your plan, not instincts.

Maintain a Trading Journal

Document each trade, entry, exit, reason, and outcome. It helps improve future performance.

Be Updated with News

Economic indicators, company earnings, or policy changes can affect price movement. Stay informed to adjust strategies accordingly.

Tips for Successful Earnings in Intraday Trading

Master Technical Charts

To effectively profit from intraday trading, understand charts like candlesticks, line, and bar charts to spot entry and exit points.

Trade Volatile but Liquid Stocks

Pick stocks that have enough movement and volume to give profit opportunities and smoother execution.

Avoid Holding Overnight Positions

The process of intraday trading requires positions to be closed the same day to reduce risks from overnight news or events.

Limit Number of Trades

Fewer high-quality trades are better than numerous poorly thought-out ones.

Understand Market Sentiment

Use tools like market breadth indicators or news sentiment to gauge the direction.

Stick to a Specific Sector or Stock Set

Familiarity improves decision-making and forecasting.

Use Alerts and Automation

Set price alerts and use trading tools for faster response and trade execution.

Maintain Discipline

Follow your rules, even in volatile conditions. Intraday trading rewards consistency.

Final Thoughts

Success in intraday trading comes from discipline, preparation, and the right strategy. With market awareness, clear risk parameters, and a steady mindset, it is possible to make money in intraday trading. Rather than relying on chance, informed decisions based on analysis help build consistency. Whether you are starting or refining your approach, it is essential to focus on the process and avoid emotional triggers. Keeping track of performance and adapting over time can improve efficiency.

Disclaimer: This blog is for educational purposes only and does not constitute investment advice.

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The information provided on this website is for general informational purposes only and is subject to change without prior notice. BFSL shall not be responsible for any consequences arising from reliance on the information provided herein and shall not be held responsible for all or any actions that may subsequently result in any loss, damage and or liability. Interest rates, fees, and charges etc., are revised from time to time, for the latest details please refer to our Pricing page.

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BFSL is acting as distributor for non-broking products/ services such as IPO, Mutual Fund, Insurance, PMS, and NPS. These are not Exchange Traded Products. For more details on risk factors, terms and conditions please read the sales brochure carefully before investing.

Investments in the securities market are subject to market risk, read all related documents carefully before investing. This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.

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