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How to Do Intraday Trading: Best Stocks, Charts & Strategies

Intraday Trading

Intraday trading can give you returns in a single day with a handsome amount of money. But it is possible if you do it strategically. As you don't have a chance to hold or carry on your position and any kind of unfavorable market condition can cost you.

Also Read: What is Intraday Trading: Is it Profitable, How to Learn& Earn Money

Making money through intraday trading is possible when you start with the right approach. Here we will help you with how to do intraday trading with trading tips, how to choose the best stocks with chart patterns, indicators and the right strategies that work for day trading.

How to Start Intraday Trading?

To start Intraday Trading, first of all, you should have a trading and demat account, where you can execute your transactions and hold the shares if bought the shares for delivery purposes.

Once you have an open trading account, you can start intraday trading but you should consider a few things keeping your mind to avoid losses and make the maximum profits. In respect of the same be brought here are a few tips for best intraday trading.

INTRADAY TRADING TIPS

Intraday trading is a risky way to make money in a short period. Any kind of wrong decision or incorrect prediction can cost you hugely. While trading intraday, you should follow a few rules and regulations that will help you to minimize chances of losses and maximize the probability to earn handsome money from the stock market.

Selecting the right stock for intraday trading is the first step towards a profitable strategy. Once you find the best stocks for intraday trading, you can apply the technical indicators and as per the market trend, you can make your position into that stock as per the market conditions. So let's find out how to find the right stocks for intraday trading.

How to Select the Best Intraday Stocks for Today?

Though, most of the stocks in the main indices such as Sensex on BSE and Nifty on NSE can be selected for the intraday trading. Apart from that stocks included in the derivatives segments (Future & Options) can be also chosen for the day trading. But still, there are various factors taken into account when selecting the best stocks for intraday trading.

Highly Liquid Stocks: Liquidity in the stock is one of the most important factors when choosing the stock for intraday trading. Stocks of Blue-chip companies are usually traded in large quantities daily. As in day trading, you need quick buyers or sellers to execute your transaction as soon as possible so you gain some profits from the stock.

Medium Volatile Stocks: Choosing a highly volatile stock or very less volatile can be risky for intraday trading. For intraday trading choose the stock that has market value fluctuations not more than 3% to avoid unexpected fluctuations in the market.

Reasonable Beta Stocks: Stocks having either very low or high beta should be avoided for intraday trading. This means there should be a strong correlation between the stock and benchmark indices, as any kind of substantial movement in the index also tends to fluctuate the price of the stock.

Trading with High Volume: This is again the same thing the stock having high liquidity should be taken for intraday trading. And the best way is to check the average volume of trades in the stocks. The high demand and supply of the stock make this highly liquid having a significant volume so that you can find quick buyers or sellers in the market.

Strong Stock in Uptrend: When the market or benchmark index is uptrend always choose the strong stock as they move higher than other stocks.

Weak Stocks in Downtrend: On the other hand in the downtrend market pick the weak stock, as they fall quickly compared to other stocks. This kind of strategy will create an opportunity for you to book the profits and earn hefty money.

Do Some Research on Stock: Just using the trend, believing in any news or looking at the momentum in the stock and trading blindly is not a good practice for day trading. Before you make any position into any stock, do some research and also check the fundamental aspects of the company to avoid any unexpected movement in the stock.

Always Trade with Stop Loss: Before you incur huge loss trading into intraday, always put the stop loss that helps to minimize the losses, if the stock moves against your expectations. In intraday trading sometimes stop loss triggers and stock bounce back, so analyze the chart and use the technical analysis to find out the most accurate stop loss point to exit.

Book Profits on Every Gain: It is not a wise decision to wait for booking a huge amount of profits from intraday trading. As sometimes stocks move in either direction or bounce back again at the same price. So keep booking the profits at every gain, as sometimes you will not get the chance to book that much profit or may incur a loss end of the day.

Why Intraday Trading is Not Allowed for Some Stocks?

Intraday trading is not allowed for all the stocks listed on the stock exchange. Apart from permanently banning few stocks from intraday trading, many stocks can be prohibited for day trading due to regulatory norms or risk management reasons.

In such cases, stocks are also banned from delivery. If there is a risk to not exit from the intraday position the intraday trading is blocked. However, there are various situations when intraday trading is prohibited and few of the popular reasons are such as.

  • If the market is highly volatile (or if there’s a sudden movement), specific intraday (MIS/CO).
  • Low Volume or Liquidity
  • Low Circuit Limit Range
  • Listing Day of IPO (as volatility is usually high)
  • The margin requirement for the stock is high.
  • Margin penalty due to high intraday trading.
  • By regulatory authority, the stock is not allowed for intraday trading (i.e. in Unsolicited SMS category stocks, or Trade-to-Trade, ASM or GSM).

Intraday trading is banned to ensure that clients don’t lose more money than what is available in their accounts and create a large credit risk to the broker.

Intraday Trading Chart Patterns

For day trading traders charts are used to understand the stock movement and analyze the patterns that help them to predict the stock movement accurately.

Though, there are many types of charts like Line, Bar, Candlestick, Renko and Heikin Ashi, etc. Different traders use different types of charts for trading as per their ease and applicability. Though, most of the traders use the candlestick charts to understand the patterns of the stock movement and can apply the best indicators for the right predictions.

Types of Chart Patterns

Chart patterns are broadly divided into three categories - continuation patterns, reversal patterns and bilateral patterns. Find the list of top chart patterns.

  • Head & Shoulder Pattern
  • Double Bottom Pattern
  • Double Top Pattern
  • Wedge Pattern
  • Pennant or flags
  • Triangle Pattern
  • Cup & Handle Pattern

Analyzing these chart patterns would be not enough to trade wisely and generate profits through intraday trading instead you need to apply various indicators that give more insights about the trend and next move of the stock you bet.

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    Best Indicator for Intraday Trading

    Indicators are developed or works using the historical and current movement of the stock with volume changes and other indications to predict where this stock is heading. You can use these indicators to make you buy or sell positions accordingly.

    Top 5 Intraday Trading Indicators:
    • Moving Average
    • Bollinger Bands
    • Momentum Oscillators
    • Relative Strength Index (RSI)
    • Moving average convergence divergence (MACD)

    Though there are more than a dozen other indicators you can use for intraday trading but neither all of them are effective not all of them are easy to understand for the common man.

    Technical Analysis for Intraday Trading

    If you learn to understand these top five, this would be enough for you to apply with the right technical analysis and generate the best profit from the intraday trading. And technical analysis is all about reading, and understanding the chart patterns using the right indicators to analyze the stocks technically and predict the stock price movement.

    Technical analysts have the knowledge and experience of understanding the chart patterns and applying the indicators can conduct the right analysis for intraday trading. There could be multiple things considered to analyse and form the best strategy that can work for day trading and gives the best results when apply for intraday trading in the market.

    Intraday Trading Strategies

    Choosing the right strategy for intraday trading could be a game-changer for you to earn a hefty amount of profits. However, any kind of wrong prediction or failure of intraday strategy could cost you more, especially if you trade with a huge amount.

    The intraday strategy involves choosing the right stock, checking current market trends, and volume in that particular stock, applying the indicators like moving averages or RSI and look the entry and exit points of the stock to make sure gets the best results.

    Range Trading: In this strategy, you can use support and resistance levels to decide where to buy and sell the stock in day trading.

    News-Based Trading Based: A very common and typical trading practice in which traders make positions based on any latest news that affects the price of the stock.

    Scalping: This is one the most common trading strategy among day traders to take advantage of even small gains, and book the profits at the small price fluctuations in the price of the stocks.

    Breakout Trading: When a stock comes out or breakout from its trading range you can choose and make a position for the intraday trading.

    Momentum Trading: When any stock was idle for many days and momentum comes into that stock, you can choose that for intraday trading.

    Trend-based Trading: To follow trend-based trading you need to use various technical analysis indicators like moving averages, trendlines, chart patterns, and momentum indicators like RSI or MACD to determine the next move of the stock and make a position for the intraday trading accordingly.

    High-Frequency Trading: In Algo-based intraday strategy algorithms-based trading is done taking the advantage of minor fluctuations in the market.

    Also Read: What is Algo Trading How it Works and Is it Profitable

    Summing-up

    Intraday trading will help you or can be profitable if you trade using the right technical indicators, tips and strategies. These are part of the technical analysis and without technical analysis, intraday trading should be not done or completely avoided.

    Once you start understanding the market trend and learn to apply the technical indicators, you will be able to make your data trading profitable. Make sure for day trading always choose the best stocks that are suitable for intraday trading.

    So what are you waiting for, jus open a trading account with Moneysukh and here you will get recommendations and tips for intraday trading by the experts. A team of highly trained and experienced technical analysts using the best tools and software to track the stocks and analyze the best ones for the day trading giving the best returns to clients.

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