What should the beginners know about intraday trading strategies?
Intraday trading, as the name pretty much suggests, relates to the buying and selling of stocks on the same day, during obviously the predefined trading hours by relative authorities. The idea here is to buy and sell stocks within the duration of the same working day in order to generate profits – as much as possible.
Such is the nature of the stock market that the stock prices of different companies keep fluctuating every day. A person who employs intraday trading strategies seeks to benefit from this rise and fall of stock prices. Buy buying the stocks when they are cheap and selling them when they are costly, one can generate serious profits. Of course, there is a risk factor associated with the process and this is why one should be careful and probably seek help from a company that specialises in the broking field and have an automated trading system set up, that helps minimize the risk factor.
Automated trading systems allow the traders to set up specific rules for both the trade entries as well as the exits, and once these rules have been programmed, they can be executed automatically with the help of a computer. This system is so trustworthy, that nearly 75% of all the shares that are traded on the stock market, come from these kinds of systems.
There are certain things you should keep in mind before diving headfirst into uncharted waters. A rule of thumb that you should always remember is to sell first and buy later, in case the market is falling and vice-versa in the opposite case.
Another important thing to remember is to not get too greedy. You need to have contingencies stop loss and profit limits. Instead of breaking the bank on a single day, book your profits at regular intervals. This way, you’ll suffer lesser losses and will be able to stay in the race for a longer duration. Another healthy advice is to deal in highly liquid shares, and that too in small quantities – unless you’re a seasoned player.
Here’s another rule of thumb if you’re going into automated trading – make it a point to not trade in the first hour, as it is chaotic and unpredictable and it is the time when the opening range is established.
Sticking to your plan is also very important. Once your desired profit levels for the day are met, you need to pull out. If you don’t follow this discipline, you’ll end up incurring substantial losses.
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