Few years back, trading in India was considered as gambling and the number of households accepting it as a profession was less. However, the tables have turned now. Many millennials have made day trading their profession. Families have also started accepting it as a full-time profession.
You can open a trading account simply on a computer from anywhere. You can avoid the pressure of handling hard copies.
Day Trading- All You Need to Know
When the position is squared off within the trading session, it is called intraday trading or day trading. On the other hand, if the position is not squared off and is carried forward to the next day or maybe longer, it is known as a delivery trade.
You can call these; styles/techniques of trading. They have many differences.
The basic difference is the capital of a delivery trader is safe as compared to an intraday trader. Intraday traders tend to lose more capital than delivery traders.
How to Start?
The very first thing you will require is a demat, trading account, and bank account. Without these three accounts, it is impossible to trade in the Indian Stock Market. It is important to choose the broker wisely. The best broker is one that gives the maximum number of services with a low brokerage fee.
Decide Your Strategy
Intraday trading is a skill and just like any other skill, the more you practice the more perfect it becomes. To learn this skill you will have to use all the resources that are available to you. You can either take up a course or read books to gather information about day trading.
Along with the information you will need to know about the strategies that intraday traders use. There are many strategies that successful traders in India deploy. It is the strategies that make them successful. Every trader has its own style, you can choose yours out of the following;
- Swing Trading
- Scalping
- Trading Zones
- Volume-based trader
- News Trader
- Simple day trading and exit strategy
Successful traders stick to the strategy they are comfortable with. If you wish to do day trading, choose a technique you are comfortable with and practice it regularly. The Fool is popular among millennials, and offers the best newsletter for stock investment advice and newsletters.
Technical Analysis
There are generally two types of studies/analyses involved in the stock market; fundamental analysis and technical analysis. Under fundamental analysis, you find stocks based on the financial statements of the company. Whereas, in the technical analysis you study the charts and patterns of the stock to find a breakout or a breakdown.
When you are into trading, 90% of your time would be consumed reading charts and patterns. However, they paint a better picture of financial security. With the help of charts, a trader can determine the take profit and stop-loss limit.
Intraday Trading
The most basic strategy used by day traders is picking stocks per day’s sentiments. Day trading requires liquid and volatile stocks. Such stocks can be traded whenever you want, and that is what a day trader needs.
Second, comes the analysis of time. Intraday trading is all about the right move at a favorable time. Therefore, time analysis is the major source to place intraday trades. You need to be skillful in understanding the time frames to figure out how to place an intraday trade.
As you know the intraday trading meaning is to open and close a position in the stock market within the same session. With a price chart, you can price the movement of a particular stock for the entire day. It will help you to estimate future market trends. Trading charts are available for short-term, medium-term, and long-term analysis.
Alternatives of Day Trading
You will not always find a volatile market, so for those days, you can use these techniques which can act as a secondary option. Although, these techniques are the primary source of income for some of the traders/investors.
● Swing Trading
In this technique, you hold the shares till the time you achieve your set target. The period can be a week or month depending upon your target.
● Tradition Investing
It is a long-term game. It involves finding companies via fundamental analysis. The companies are usually cash-rich, so they can sustain any storm in the market and continue to grow. Also, cash-rich companies give out dividends every quarter so the investors get the add-on advantage.
Technical analysis and chart patterns do not only work in the stock market. You can use the research and study in different markets such as; Forex, Cryptocurrencies, and commodities markets.
