Basics of Intra-Day Trading

Day Trading - Buying and selling of shares on daily basis is called day trading this is also called as Intra day trading. Whatever you buy today you have to sell it today OR whatever you sell today you have to buy it today and very importantly during market hours.

Advantages of Day Trading

• In Intra-day trading, Margin Trading is quiet popular, in Margin Trading you get margin on your balance amount. This means you get more leverages (amount) on your available balance amount to do day trading. Margin trading is only possible in day trading and not in delivery trading. How much extra amount (margin) you are going to get that totally depends on your broker, or your online trading system brokers. Some broker provides 3, 4, 5, and 6 times extra margin. If you do margin trading then you have to square off your open trades on the same day means if you bought shares then you have to sell and if you sold shares then you have to buy before market time that is 3:30 PM finishes.
• Second important advantage is that you have to pay is less brokerage (commissions) on day trading (Intraday) as compared to delivery trading. This brokerage again depends from broker to broker (or on your online trading system). 
• In day trading you can sell and then buy this is called short sell which you cant do in delivery trading. You can sell shares when prices are falling and then buy when price falls further.

Disadvantage of Day Trading

• As you are benefited to get more extra amount to trade i.e. Margin Trading and get more extra profit it is also equally true that you are also taking more risk of loss.
• At any cost you have to square off the open transaction before 3:30 PM (especially if you are doing margin trading) at that time the price may not be in your favor.

Strategies for Intra-day Trading

1. The primary strategy of day trading is to earn consistent money on daily basis.
2. Observe carefully the stock price movements - Stock price movements like Open, (the first price at which the stock opens when market opens in the morning) High, (The stock price reached at the highest level in a day) Low (The stock price reached the lowest level in a day) and finally Close. (The stock price at which it remains or the final price of the stock when the market closes for a day). One more important factor to watch is stock price fluctuations. Stock price fluctuations means by how many Rupees (INR) the stock is moving (either up or down). This gives you an idea on what price to buy and at what price to sell (or first sell and then buy). This strategy is very useful for day trading but in fact you get more superior idea (or plan) for TOMORROW’S DAY TRADING for this particular stock.
3. Keep a close watch on Supply and Demand - Supply and demand means how many buyers are willing to buy (this indicates the demand) and how many sellers are aggressive to sell (this indicates the supply). Always remember the stock price movement depends on supply and demand. Simple thing to remember ( not only in stock market or day trading but also in general life) that more demand and less supply means price is going to move up and if more supply and less demand then price is going to come down. Overcall if you study this strategy carefully then you will come to know whether the people are interested to buy or sell the stock and hence the price moves accordingly that is if see more buyers then the price is going to move up and if you see more sellers then price is going to fall down.

A successful day trader or share market trading requires couple of disciplines and following trading requirements -

• PC configured with latest Trading application - If you need to do trading yourself then you need to have a PC or smartphone or else you can do trading in internet café also.
• Good Internet-Connection/Speed - The internet connection should not be slow or should not face any other problem especially in Day Trading.
• Online Trading Account (De-Mat Account) - You need to open online share trading account with any of the available banks or online brokers.

In day trading, traders mostly wish to do buying and selling on small profits or else they look for overbought or oversold shares. Taking into consideration these important points following basic things you should look in for shares while choosing them for day trading.

Price Volatility : The Price volatility means the movement (up and down) of share price should be more (or high) through out the day. In other words the fluctuation in share prices should be on high rate so that it will be easy for you to buy and sell on different prices. Suppose if share is moving up and down in very narrow range then on what price you will buy and sell? So it is always better if you choose shares which have high volatility in price movement.

Volume (Quantity) : Volume means trading quantities. The shares which you choose for day trading should have high volumes (or high traded quantity). Why this is required? The high volume indicates that there is more liquidity. Liquidity means lots of transactions had took place on this share and more people are interested to trade in this share. This will ease your trading job because you will get more exposure to the price to buy and sell at anytime. Due to high volumes there will be also high price fluctuations.

Following are very important points to be always remember by day traders.

Entry & Exit points -

Stop loss limits - 

Profit Targets -

Desired risk/Reward profile

Amount of capital to be committed to trades

Holding Period - How long you need to hold the share if incase it is against your favor.

Day trading rules for Share Market

It’s important to do practice or paper trading before you starts actual trading. Following are the few reasons,

1. It is very important since you will come to know how to place buy/sell orders, and will become familiar and perfect about using your trading system.
2. You will gain confidence in yourself.
3. The fear of trading will vanish. It is very important to keep fear away while doing day trading.
4. You will become active to enter and exit the trade. It’s vital important that you must be pretty fast to enter and exit the trade (i.e.open positions).