If you are new and you are interested in Intraday trading then the first thing is you must have a trading account. When you open your Demat account then almost all the brokers provide a trading account with that.
After getting your trading account, its simple to buy and sell the stocks, you can learn that on different YouTube channel , but the important points that i am going to tell you, if you follow these basic intraday rules then i can assure you that, you could minimize your losses and can earn some good profit.
Intraday Trading rules
In stock market profit and loss are part of game, if you don’t make profit , but if you save your capital than its better than losing your capital. Here are some important intraday trading rules for beginners that you must remember when you start your Intraday Trading.
1. Always trade according to market trend – It is said trend is your friend so, the first intraday trading rule is never try to trade against the market trend. If the market trend is bullish then you should avoid making a short position, you should initiate your trade in buying side, and must pick those stocks which are in uptrend. Or if the trend is negative means bear are selling in market then avoid buying , you should go with selling the stocks.
2. Always try to trade in those stocks where volume is very high – This is an important point, you should choose those stocks where volume is generally very high , generally you can choose Nifty 50 stocks. The reason is with low volume stock, buyer or seller can easily manipulate the stock price. And also you will see a big difference between buyer and seller bidding price. So avoid those stocks where the volume is in few thousands.
3. Avoid high volatile and very low volatile stock if you are a new trader – Its simple if you are not experienced and novice trader then you should keep away those highly volatile stock , which shows 6-10 % average move either side in intraday, because they will hit your stop loss. On the other side also not trade in those stocks which are low volatile stock, the reason if the stock will not move from its position then how will you decide whether to buy or sell that stock.
4. In early days try to choose a stock between 300 to 700 range to trade- In early starting days you should trade in those stock which are in price band of above 300 and maximum 700, because suppose you choose a stock with price 100rs and if stock moves 3%, means 3 rupees, then it will be not easy for you to entry and exit.
5. Don’t try to trade in future and Option – On YouTube you will find lots of videos where, traders make millions of profit in future and options. That is not easy, if you are new and try to trade in FNO section then you will lose your whole capital, because it is always said, if you trade in future in without any strategy then it will ruined your future. So in starting avoid trading in future and option. As well as you should also avoid trading in Index, you can check the chart and level of Nifty and Bank nifty to track market direction. Because Index future and option are very volatile, it is very difficult for a novice trader to handle such volatility.
6. Before Starting your intraday trade you must have some selected stock list based on previous day chart analysis- After market closing do your chart analysis, and find some good stock for next day trading. Don’t try to pick any running stock or never jump in any trade based on news until you have proper reason with entry and exit level.
7. Follow proper risk management- In intraday always trade with a stop loss, before your entry you must have your defined stop loss and target, and also you should follow a good risk and reward ration like minimum 1:2 or 1:3, here if you follow 1:2 means if your stop loss if 5 rupee then your target should be 10 rupees, so always initiate a trade according to that.
8. In starting start your trade with a small quantity- In starting you should trade with low quantity, never take a risk on your whole capital, you should plan your trade accordingly , so that still you get a loss and if you find some good entry then you have sufficient amount to trade again, but avoid overtrading.
9. Never hold your loosing trade try to hold your winning trade- It means if your trade goes in opposite side and you are in loss then don’t try to hold it, cut your losing side, because its own you how much loss you can take, but the profit is not in your hand, so if you are in winning side then don’t cut your trade so early. To protect your position you can trail your stop loss.
10. When you are in loss don’t try to average your position – Generally in investment we average our position at lower level because that is for long term, but during intraday if you are in losing side then don’t try to average your position, because if the trend is against you then you could see a big fall, so cut your position before it converts in a huge loss.
11. Never try to hold your losing intraday position for next day- Generally a some novice trade when they are in loss, they hold their position whole day with a hope then it will recover, and finally around closing time they convert their intraday position for next days with a hope that next day stock will recover their loss, but market doesn’t run on hope, so never carry your losing trade for next day.
Nirmal is a NISM Certified Derivative Trader & the Founder of InvestandEarn.net (Financial Blog). He entered the world of Equity research to explore his interests in financial markets having 5+ Years of Experience in Share Market Trading & Investing. Nirmal frequently writes about Share Market Trading & Investment and publishes his personal view on the market. Drop him a mail at firstname.lastname@example.org.