You must trade in the intraday sector with the correct broker who provides both research and technical help. Having the correct tools is essential for maximising intraday trading. Given the high rate of transactions, you must select an account with cheap transaction fees and quick execution. The Trade Free Plan from Kotak Securities is one option to examine. It enables you to make intraday transactions with no brokerage fees.
You must square off your position before closing the market in intraday trades. As a result, you must select equities with sufficient liquidity to execute such trades. It is why many people prefer high-liquidity equities, such as large-cap stocks. It reduces the possibility of your trades influencing the stock price of the chosen stock.
For intraday traders, market timing is critical. Choosing the incorrect timing to enter a trade might distinguish between profit and loss. Many experts believe that it is best to avoid taking a position during the first hour of trading. It is due to the market’s volatility during this period.
Some of the benefits of intraday trading include:
- Traders get higher margins than investors.
- High potential for profit
- Lower brokerage fees, particularly with the Trade Free Plan option
- Strategies with a short-to-medium time horizon that will pay dividends
That being said, consider whether you are prepared to face high risk and are willing to put in extra work to analyse market behaviour regularly. The first step is to create a trading and Demat account. If you currently have a stock market account, you might wish to create a second account for intraday trading. You may then sign up for the appropriate tools to assist you with intraday trading. It can also assist you in tax planning because intraday trades are considered differently under the Income Tax Act.
Once you have the necessary tools and accounts, you can review daily charts to detect price movement tendencies. It may need the use of numerous technical analysis tools. These features are available on trading platforms and software such as TradeSmart and KEAT ProX.
As an intraday trader, you aim to predict the market direction as soon as possible. The easiest method is to find the ‘value area’ for the equities you want to trade-in. It might assist you in making a trading decision. It is referred to as the ’80 per cent rule’ by experts. The value region is the price range in which at least 70% of the previous day’s activity occurred. Once you’ve pinpointed this spot, keep an eye on where the pricing opens for the day.
According to the rule, if the price begins below the range and remains there for the first hour, there is an 80% likelihood that it will increase into the range. On the other hand, if it begins above the value region and remains there for the first hour, there is an equivalent likelihood that the price will fall within it. It is the most fundamental intraday trading method. If the stock begins and remains above, you may choose to initiate a short position towards the peak of the value region.
Similarly, if the stock begins below the value area and remains below it for an hour, you can enter a long position at the bottom of the value region. Remember, it is only a guideline. Finally, don’t forget to set a stop-loss to account for the 20% probability that the stock will not fill the value area. If you start intraday trading with the online trading app of Kotak Securities, this will help you in many ways.
Other than all these, the online trading app of Kotak Securities has multiple features. Some of them are:
- Pre-defined watchlists that select stocks with your preferences
- Updated finance news and insights
- Top-quality research analysis
- Faster and easier searching
- The fast and secured login procedure
- Easy management of your investment portfolio
- Simpler diversification of portfolio
- Tracking your trade reports
- Placing orders with just a few taps
For those willing to take risks and have the time to monitor the market and timing deals closely, Intraday trading offers huge profits and may appear quite appealing. However, it involves a bigger risk than the delivery segment. If you have a day job that demands your undivided attention for most trading hours, you should avoid intraday trading.
For starters, you must keep a close eye on the market and time your trades perfectly. Second, to make the proper judgments, you must have a thorough comprehension of technical analysis on daily charts and the time to conduct it.