If You are a trader or an investor, you must have heard about intraday trading or day trading and you must be a little curious about how to make money from intraday trading. Well, here are 7 different tips on making money from intraday trading.
Table of Contents
What Is Intraday Trading?
Intraday trading, also known as day trading is buying and selling a stock or other security on the same day before the stock market closes. In other words, you have to close all your open position during the market hour in intraday trading.
7 Practical Tips On How To Make Money From Intraday Trading
Different traders have different styles of intraday trading, but it mostly depends upon you and how you will take on it. Profit and loss are part of intraday trading, but how efficiently you will manage the loss is important.
You can learn from both your profits and losses. So here are 7 practical tips on how to make money from intraday trading.
1. Find A Low-Cost Broker
In order to trade in the stock market, you need a stockbroker, through which you can place buy and sell orders. After opening an investment account through a stockbroker, you are eligible to trade in the stock market.
Intraday traders are known for higher volume trading and frequency is also quite high. So while choosing a stockbroker, you should pick someone who gives higher leverage and charge fewer commissions. Usually, discount brokers are the solution as they charge very fewer commissions on trades.
The leverage for trade generally changes with brokers, the range is 10 times to even 50 times, depending upon the broker and stock you’re trading in. A low-cost broker or discount broker will save your money, you couldn’t imagine.
2. Choose 5-10 High-Liquid Stocks
After opening an investment account, you need to study the market carefully. Study different stocks, indexes, ETFs, and other securities. Carefully observe stocks with higher volume (the buyer and seller volume). As liquidity matters the most.
Usually, stocks with higher liquidity, tend to be lower volatility, and operators don’t stand a chance to manipulate those scripts. Other benefits of liquid counter include higher-margin or leverage, so you will able to buy or sell more numbers of shares.
There are thousands of stocks listed on an exchange and you can not track each of them daily. So choosing 5 to 10 stocks is very important because you can observe them daily and you will able to predict its behavior on normal market conditions.
3. Get Updates And News Related Those Stocks
After choosing 5 to 10 stocks for intraday trading, you need to track those stock and news related to them. News like corporate actions, financial results, balance sheet and changes, monthly sales figures, and government’s restrictions and approvals have a critical impact on the stock price.
You can trade those stocks according to its news flow, like if a company posted an extra-ordinary result then you can trade on the long side and vice-versa. You can get that news using certain news websites and mobile applications.
4. Find Their Range
Finding a stock’s trading range is also quite important and in-order to find a stock’s trading range you need to see a candlestick chart, that is most broker offers in their trading platforms. Using the chart, you can apply certain technical indicators like the pivot point, which shows you the stock’s support and resistance, and using that you will figure out the range to make money from intraday trading.
5. Trade-In Both Ways
Most of the stocks trade in a range and investors can get profit from both the buying and selling side. Generally, most of the trader sticks to a single side for a whole day make a loss as market changes trend quite often in a day with the change in the global market scenario.
You can trade in both buying and selling side by observing a technical chart pattern. The most important technical indicators for swing trading are MACD, relative strength index (RSI), Bollinger Bands, and the stochastic oscillator.
The stochastic Oscillator, RSI, and Bollinger band will show to the support and resistance, and MACD will confirm the trend. You can use any of the technical indicators that show support and resistance with MACD to trade on both sides to make money from intraday trading.
6. Move With Trend
As per the famous saying; “trend is your friend”, you need to follow a stock’s trend in intraday trading. One of the most important advice I can give you is that, do not jump into trading right after the market opens. Always wait for a few minutes to get the market trend to make money from intraday trading.
You can use technical indicators like moving average convergence divergence to observe the market and stock trends. After getting the trend confirmation you can buy or sell a certain script.
7. Keep A Strict Stop-Loss
Stop-loss is an order placed by the trader to sell or buy a stock or other security after crossing a certain price or level. For example, a stock is trading at 200 level and there is a support level at 196 so if you buy that stock you can put a stop-loss below 196 to avoid potentially higher loss.
It is very important to use a stop-loss during an intraday trade as with heavy volume there is a very good chance you will get profit with good analysis, but the market does not understand that if stock comes into the hammer then it has the capability to erase all your capital. So it is very important to keep a stop-loss while trading to make money from intraday trading.
Intraday trading is quite a good tool to make money every trading day, bit certainly is risky and investors should learn before start intraday trading. For intraday trading, traders should use a smaller portion of their capital and rest you be reserved for average and back up.
Using the right technical tools you can easily make money from intraday trading. Not only just stocks, but you can also trade in currencies, commodities, ETFs, Indices, and various other derivatives.
So what you think of this article about how to make money from intraday trading, please comment and suggest to us, what you what to know about intraday trading and will write an article about that.