EN
Intraday trading is riskier than investing in the regular stock market. Most traders, especially beginners, lose money in intraday trading because of the high volatility of the stock markets. Convention says that one should not risk ovDer two per cent of their total trading capital on a single trade to ensure the right risk management in intraday trading. It is important, especially for beginners, to understand the basics of such trading to avoid losses – the risk of ignorance is greater than the market risk itself.
Key Takeaways
-
Intraday trading involves buying and selling stocks within the same day, requiring discipline, technical analysis, and controlled risk-taking.
-
Traders must use stop loss, plan entry–exit levels, and avoid emotional decisions.
-
Choosing liquid stocks and the right trading strategy is essential for consistent results.
-
Understanding common pitfalls strengthens decision-making and improves long-term intraday performance.
Tips for Intraday Trading
Below are a few tips for intraday trading in Indian share market which will help investors in making the right decision:
Choose Two or Three Liquid Shares
Intraday trading involves squaring open positions before the end of the trading session. This is why it is recommended to choose two or three large-cap shares that are highly liquid. Investing in mid-cap or small-cap stocks may require investors to hold the shares longer, as lower trading volumes can make buying or selling difficult.
Develop an informed short-term trajectory beforehand and stick to it
Following points are essential pieces of a short term trajectory:
- Determine your entry level and target price beforehand. It is common for a person’s psychology to change after purchasing the shares. As a result, you may sell even if the price sees a nominal increase. Due to this, you may lose the opportunity to take advantage of higher gains because of the price increase.
- Book your profits once the target is reached. Uninformed greed may drive you to keep a stock beyond the necessary time-frame and increase the risk of a fall in prices. If you insist on staying on, make sure you readjust a stop-loss price to meet the new expectations.
Stop loss is a trigger that is used to automatically sell the shares if the price falls below a specified limit. For investors who have used short-selling, stop loss reduces loss in case the price rises beyond their expectations.
Realign your strategy for intraday trading (as opposed to long-term investment)
Value investment adopts fundamentals while the former considers the technical details. It is common for day traders to take delivery of shares in case the target price is not met. He or she then waits for the price to recover to earn back his or her money. This is not recommended because the stock may not be worthy of investing, as it was purchased only for a shorter duration.
Research Your Wishlist Thoroughly
Investors are advised to include 8 to 10 shares in their wish lists and research these in depth. Knowing about corporate events, such as mergers, bonus dates, stock splits, dividend payments, etc., along with their technical levels is important. Using the Internet for finding resistance and support levels will also be beneficial. Ofcourse, researching the fundamental concepts and jargon of the stock market is necessary.
Don’t Move against the Market
Even experienced professionals with advanced tools are not able to predict market movements. There are times when all technical factors depict a bull market; however, there may still be a decline. These factors are only indicative and do not provide any guarantees. If the market moves against your expectations, it is important to exit your position to avoid huge losses. Intraday trading provides higher leverage, which effectively provides decent returns in one day. Being content is crucial to succeeding as a day trader.
Time the Market:
The first hour of a trading session, often referred to as the "opening range," is frequently characterised by extreme price volatility and high trading volumes. This is primarily the market is reacting to overnight news, international market trends, and a surge of pending orders.
Since price movements can be erratic and unpredictable, many individual choose to wait for the initial volatility to subside. This allows a clearer trend to establish itself and provides a more stable environment for technical indicators to provide reliable signals before any positions are entered.
Exit the Position under Unfavourable Conditions:
For trades that provide profits and price-give reversal (price expected to show reverse trends), it is prudent to book the profits and exit the open position. In addition, if the conditions are not favourable to the position, it is advisable to immediately exit and not await the stop-loss trigger to be activated. This will help traders reduce their losses.
Invest Small Amounts that won’t Pinch:
It is not uncommon for beginners to get carried away once they make some profits during day trading. However, markets are volatile and predicting the trends is not easy even for seasoned professionals. In such situations, beginners can easily lose all their investments. This is why an important intraday tip is to invest smaller sums that a user can afford to lose. This will ensure individuals do not face financial difficulties in case the markets do not favour them. Traders must not risk over two per cent of their total trading capital on a single trade to ensure the right risk management.
Map Resistance and Support:
Every stock price fluctuates within a range from the initial 30 minutes of the start of the trading session, which is known as the opening range. The highest and lowest prices during this period are assumed as the resistance and support levels. It is advisable to buy when the share price moves beyond the opening range high and sell if the price falls below the opening range low.
Always Close All Open Positions:
Some traders may get tempted to take delivery of their positions in case their targets are not achieved. This is one of the biggest errors and it is crucial to close all open positions even if traders have to book a loss. Not closing exposes the trader to overnight risk (eg: market crash in USA or Europe)
Spend time on the actual monitoring and execution
Day trading is not for professionals who are employed in a full-time job. Traders must be able to monitor the market movements throughout the market session (from opening bell until its closing) to enable them to make the right calls as required.
Monitor Intraday Trading indicators
When it comes to booking profits in intraday trading, you will require to do a lot of research. For the same purpose, you need to follow certain indicators. Often intraday tips are believed to be the Holy Grail; this, however, is not entirely accurate. Intraday Trading indicators are beneficial tools when used with a comprehensive strategy to maximise returns.
Intraday Time Analysis
When it comes to intraday trading, daily charts are the most commonly used charts that represent the price movements on a one-day interval. These charts are a popular intraday trading technique and help illustrate the movement of the prices between the opening bell and closing of the daily trading session. There are several methods in which intraday trading charts can be used. Below are some of the most commonly used charts while intraday trading on the Indian stock market. Know more about intraday trading time analysis.
FINAL CHECKLIST:
- Choose Two or Three Liquid Shares
- Develop an informed short-term trajectory beforehand and stick to it
- Realign your strategy for intraday trading (as opposed to long-term investment)
- Research your Wish list thoroughly
- Don’t Move against the Market
- Time the Market:
- Exit the Position under Unfavourable Conditions:
- Invest Small Amounts that Won’t Pinch:
- Map Resistance and Support:
- Always Close All Open Positions:
- Spend time on the actual monitoring and execution
- Monitor Intraday Trading indicators
- Intraday Time Analysis
How to Choose Stocks for Intraday Trading?
To succeed as a day trader, it is important to know how to pick stocks for intraday trading. Often people are unable to make profits because they fail to select appropriate stocks to trade. Day trading, if not managed properly, can have drastic results on the financial well-being of users. The temptation of earning huge profits in a short period of time can entice traders. However, with incomplete understanding and knowledge, intraday trading can be harmful. Intraday traders always face inherent risks that exist in the stock markets. Price volatility and fluctuating daily volume are a couple of factors that affect the stocks picked for daily trading. In order to balance the risk taken, while achieving higher returns, here are some advanced intraday trading strategies to follow:
Opening Range Breakout (ORB):
This intraday trading strategy is widely used by professional traders as well as amateurs. To maximise the potential of this strategy, combining it with the optimum use of indicators, accurate assessment of market sentiment and stringent rules are recommended. ORB has numerous variations; some traders may opt for trade on large breakouts from the opening range and others choose to place their trades on the opening range breakout. The time window for the trades ranges between 30 minutes and three hours.
Demand-Supply Imbalances:
An important intraday trading tip for beginners is to look for stocks where drastic demand-supply imbalances exist and opt for these as entry points. The financial markets follow the normal demand and supply rules—price reduces when there is no demand for higher supplies and vice versa. Users must learn to identify such points on the price chart through research and studying the historical movements.
Opt for 3:1 Risk-Reward Ratio:
Traders, especially beginners, must understand the appropriate risk-reward ratio. Initially, finding stocks that provide a potential risk-reward ratio of at least 3:1 will be beneficial in earning profits in share market investment. This strategy will allow them to lose small while giving them the opportunity to earn big even if they have losses on most of their trades.
Use Relative Strength Index (RSI) and Average Directional Index (ADX):
Combining these two intraday trading strategies to find buy and sell opportunities can help traders earn profits. The RSI is a technical momentum indicator comparing recent losses and gains to determine over purchased and oversold stocks. The ADX is beneficial and used to determine when the prices are showing strong trends. In most scenarios, if the RSI crosses the upper limit, it is indicative of a sell trade and vice versa. However, when you combine the RSI and ADX, intraday traders buy when the RSI crosses the upper limit and vice versa. The ADX is used as the trend identifier to help users take their buy or sell decisions.
Also Read, Opening Range Breakout (ORB) Strategy
Common Intraday Trading Strategies to Consider
Successful day traders depend on well-defined methods rather than intuition, and understanding key intraday trading strategies can help improve accuracy and risk control. These strategies guide decisions on when to enter and exit trades, how to interpret price movements and how to stay disciplined during market volatility:
-
Momentum Trading: This strategy focuses on stocks showing strong directional movement due to news, earnings, or high volumes. The objective is to ride the trend briefly and exit before momentum fades.
-
Breakout Trading: This strategy, which involves acting when the price moves above resistance or below support with significant volume, signals a potential continuation.
-
Reversal Trading: It seeks opportunities when a stock that has moved sharply begins to show signs of stabilising and reversing direction. This strategy demands caution and strong technical analysis.
-
Scalping: It is suited to highly active traders who aim to take several small profits throughout the day by entering and exiting positions quickly.
When applying intraday trading strategies, traders must prioritise strict stop-loss levels, avoid emotional decision-making and rely on tools such as moving averages, RSI and volume indicators. Consistency, discipline and continuous learning remain essential for long-term success in intraday trading.
Common Pitfalls to Avoid in Intraday Trading
Understanding common mistakes is essential when applying intraday trading tips to minimise potential losses. These include:
-
One of the most frequent mistakes is trading without predetermined entry, exit and stop-loss levels, which exposes traders to uncontrolled losses.
-
Emotional decision-making, often driven by fear or greed, can also lead to impulsive trades that deviate from a well planned strategy.
-
Overtrading is another major risk, as taking too many positions in a single session may increase transaction costs and reduce overall profitability.
-
Beginners also tend to hold losing trades for too long, hoping the price will recover, rather than exiting promptly when targets are breached.
-
Ignoring technical analysis tools or failing to stay updated with market news makes trading decisions more speculative and less informed.
By recognising these pitfalls early, traders can refine their approach and improve consistency in their intraday performance, ultimately strengthening their use of intraday trading tips for more disciplined and informed decision making.
Conclusion
Intraday traders always face inherent risks that exist in the stock markets. Price volatility and fluctuating daily volume are a couple of factors that affect the stocks picked for daily trading. Ideally, traders should not risk over 2% of their total trading capital on a single trade to ensure the right risk management.
