Master Intraday Trading: Learn How To Trade, Chart Indicators, Margin & Leverage

What Is Intraday Trading Or Day Trading?

In stock market if you buy or sell shares or other financial instruments within the day, it is termed as intraday trading or day trading.

Day trading or intraday is kind of trading style in the market. The basic intention of a trader is to benefit from the movements made by a stock within market hours in a day.

To illustrate suppose you came to know a news which have an impact on a specific stock, now you decided to buy that stock assume PNB (punjab national bank) current market price Rs. 85.

In case if it get increased within market hours that day to Rs. 90, than the difference between your buy price and sell price will be your profit.

So Rs. 5 will be your profit per share. first thing to remember when you execute the trade you choose MIS (Margin Intraday Square up) it means that whether you have profit or loss it will get squared off within market hours .

In intraday trades, you need to square-off your position before the market closes. So, it is very important that you choose stocks that have enough liquidity for executing such trades.

This is why many recommend high liquid stocks for intraday trading . As a matter of fact traders also do intraday trading in Futures & Option .

How to start Intraday trading or Day trading

If you are a person who is ready to invest his time ,energy & money than intraday trading can be done . We will not learn the various strategies of day trading here, however let us look for the basics.

So market starts from morning 9 a.m till 3:30 p.m, there are some restrictions from different brokers as to what time the trade will get automatically squared off .

Mostly it happens ranging from 3:15 to 3:25 . Once you have decide which stock you would buy or sell,you need to place the order ,make sure to choose MIS (Margin Intraday Square up) as a type of trade .

There are different types of orders available to choose , it can be Market order ( the order will get executed whatever will be the price in market for that stock ),

Limit order (you can limit the price at which you want to buy or sell stock i.e if stock is trading in market at 100 and you want to buy it at 98 instead of 100) , you can choose this type to place the order .

Once the stock reaches to this price your order will get executed automatically .

Charting & Technical indicators

Technical analysis is the study of chart patterns and mathematical figures to understand market trends and pick stocks , it is based on rule of history repeat itself.

Most of the traders pay close attention to intraday price movements by using real-time charts in an attempt to benefit from short-term price fluctuations.

A volume chart depicts the number of shares of a company that were bought and sold in the market during a day .

Moreover they use different indicators like MACD (Moving average convergence divergence ) , SMA (Simple moving average) .

EMA (Exponential moving average) ,RSI (Relative Strength Index) , Support & Resistance , Pivot Points to know this fluctuations in a stock .

These tools would be available to you in your trading terminal provided to you by your broker . For the purpose of technical analysis, there are various charts available .

You may choose line or bar charts, or use a candlestick chart. A candlestick chart is a special kind of chart that is very useful for technical analysis. We will learn about this in other blog on how to use them.

Now a days there is indicator called super trend to know which direction a stock would move in future. So, its better to have a little understanding of these technical’s before initiating trades in market.

Short-term traders typically use 1 minute, 5 minute ,15,30,60-minute intraday charts when trading within the market day.

What is Stop-loss in Day trade

The reason to know all of this is to avoid your losses or to minimize it. As intraday trading is highly risky its better to be prepared .

You can use stop-loss to restrict your losses. Stop loss is nothing but the target price for booking losses ,if trade does not move in your direction .

for example You bought stock ABC @ Rs.100 thinking it move upwards however due to certain reasons , it started following downwards , it can move and hit Lower circuit .

To avoid these you can put a stop-loss at Rs.95 or whichever price depending upon your risk taking ability, the moment it hits this target your order will be executed in market and loss will be booked.

Like wise you can choose to select the target for your profit trades as well .

Margin or Leverage in intraday trading

This word Margin is one of the biggest reason for day traders . Let us suppose you have Rs.1000 in your trading account and you want to buy tata motor share currently @ 217 .

However with 1000 maximum you can buy 4 shares (217 X 4). As we at Rupeezy provide 40X margin for equity intraday, 1000×40 = 40,000.

Now you can buy approx. 180 share, you can trade with this much margin for intraday .Margin has it benefits as the return would be maximum but the risk is also equal .

Another key point is, you have to watch the market and time your trades to perfection.

Secondly, you need to have a good understanding technical analysis on daily charts to make the right decisions. Please Avoid trading on speculations it is our humble request to all traders .

To conclude Intraday trading requires intense focus and attention. Moreover if you have capability of holding your emotions than only trade in market. Otherwise the chances of loss is even.

If you have any doubts do let us know through comments.