How to make profit in Intraday Trading?

How to make profit in Intraday Trading?

The experts believe intraday trading isn't ideal for everyone since it demands a practical approach from traders. Additionally, profit in intraday trading is also influenced by emotional factors. So, if you're looking for how to make a profit in intraday stocks trading, it's important to know that there are no shortcuts. However, you can learn how to profit from intraday trading with experience and research.

As intraday trading is a short-term strategy, you should do your research well before you get started. In this kind of trading, you must get in and out of the markets quickly. Also, to maximise profits in intraday trading, you must use proven strategies and tactics developed by serious traders. In this article, we'll discuss how to get more profit in intraday trading using proven strategies and tactics. 

Understanding Intraday Trading

The term intraday literally means "within a day" or "the day." Trading and finance terms like intraday refer to securities traded on the markets during normal business hours. Also, the word "intraday" means that an asset has crossed highs and lows throughout the day of trading.  

It is mostly day traders or traders who are going to the markets to make short-term profits in intraday trading based on price movements. Moreover, the intraday market allows for multiple trades to occur simultaneously. As markets close, traders will ensure all their positions are squared off with all their trades settled. 

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Table of Content

  1. Understanding Intraday Trading
  2. How to make a Profit in Intraday Stock Trading?
  3. Is Intraday Trading profitable?
  4. Things to know before you start making profit in Intraday Trading

How to make a Profit in Intraday Stock Trading?

Regarding intraday trading, it's all about managing your risk. You are more likely to be profitable in intraday trading if you follow these strategies and tactics:

1.Make a List of Your Trading Rules

Basically, it lays out all the rules and regulations regarding intraday trading. It is important to know how much loss you are willing to accept, how much capital depletion you can tolerate, and what the risk-reward ratio should be. As part of the trading rule book, you will determine how to identify stocks for intraday trading, how to choose stocks, and how to execute and monitor your trades. In order to make a profit in intraday trading, you must strictly follow your trading rule book.

2.Decide how much loss you're willing to take

You've got to decide how much you're willing to lose. At that point, you've got to stop trading and start over. Also, decide how much you're willing to lose in a day. If you lose in the first hour, then you need to shut down for the rest of the day. Also, figure out the risk-reward, which is the relationship between your stop loss and profit.

3.Set clear stop losses for each trade and stick to them

You must have a stop loss no matter what side of the trade you're on. Place the stop losses around the supports and resistances or at a level you can afford. However, don't wait until after the trade is executed to put the stop-loss in. As soon as your stop loss is triggered, close your position. 

4.Set clear profit goals and stick to them

It doesn't matter whether you're long or short in the market, you need an intraday profit target. These profit targets must be added to the bracket order so that the other leg automatically gets cancelled once the stop loss or profit target is hit. 

5.Invest based on rumors and sell based on news

Although it may seem off-track, this is crucial to intraday trading. In most cases, the impact of an announcement already exists in the price, or it does not leave much room for you. Thus, you have to start your trade based on expectations and then book your profits when the real announcement comes out. It's the best way to get the most alpha out of your intraday trades. Also, be careful not to go too much by rumours and tips in the market, but keep your ears open. 

6.Make your own chart and don't rely on tips

Firstly, it's not rocket science to understand technical charting. With some effort and training, you can read technical charts like supports, resistances, Bollinger bands, EMA breakouts, retracements, etc. To gain profit in intraday trading, you must be your own chartist.

7.Don't keep too many positions open

Many intraday traders make this fundamental mistake. If you have many positions open, you are not able to do justice to all of them because you can only track a limited number of positions based on fundamentals, charts, and news flows. Thus, it is likely that you will overlook some intraday positions if you keep too many open. Ideally, you should not have more than 4-5 open positions at any given time. 

8.Don't do anything if the market is too confusing

There are three basic intraday trading strategies: buying, selling, and doing nothing. It's ironic, but intraday trading can actually make you money by not doing anything. In other words, if the market becomes too confusing, it's best to stay out rather than attempt to fish in troubled waters. In this way, you will maintain liquidity for when better opportunities arise.

9.Make sure you trade the trend rather than trying to outsmart the market

When you see a trend in the market, it is sending you a message. As a trader, you need to pay attention to that message and act accordingly. Once you develop this mindset, you are automatically on the path to profitability in intraday trading 

10.Keep a trading diary and record everything in detail

Besides a record of trades and their justifications, a trading diary includes a daily evaluation of how they performed. Also, you make careful notes on where you went wrong and what you could do better next time. By doing this, you will be able to fine-tune your intraday trading and keep your profits on track. 

Is Intraday Trading profitable?

The question every trader asks before engaging in intraday trading is, "Is intraday trading profitable?" Having a good understanding of the market, price movements, and the sector where trading is happening is the key to profitable intraday trading.

In intraday trading, you can make good money if you study the markets. You can start by reading markets and keeping up with both domestic and international markets. Additionally, you can read about company updates, government updates, etc. All these factors determine the direction of stock markets, and these are what you should focus on.

It is also crucial for you to spend time studying individual companies' stocks. To make a profit in intraday trading, it is important to know which stocks are liquid enough to offload within a day. Initially, you might run into losses, but you shouldn't let this discourage you. Instead, you should note your mistakes and learn from them. Know more about trading profit and loss account.

Things to know before you start making profit in Intraday Trading

Before you start your intraday trade, you need to know some of the things mentioned below:1.

1.Follow Market

Forecasting market moves is challenging for even experienced experts. Technical signs may indicate a bull market but don't guarantee success. If the market swings against expectations, exit holdings quickly to avoid losses. Intraday trading offers higher leverage, allowing for significant returns in a single day. However, it's crucial to exit holdings quickly to avoid significant losses.

2.Start Small

During the early stages of trading, it's crucial not to take too much risk. Focus on one or two stocks and gradually increase the volume and value of your trades as you gain market knowledge. Starting small allows you to learn from your failures and better understand the market, preventing repeated mistakes.

3.Manage Risk

Use risk management strategies such as position size and stop loss orders to control risk successfully. You may reduce any losses and protect your trade.

4.Stop Loss is Mandatory

Successful traders excel in discipline, which involves consistently executing stop-loss orders when a stock hits a preset price. These orders initiate purchases or sell, especially in intraday trading. Failure to use stop-loss can result in unmanageable marked-to-market losses, making discipline a crucial characteristic for success in trading.

5.Entry and Exit Point

Traders may occasionally find themselves attracted to a certain stock, but it's important to remember that success comes from using well-defined techniques. Maintaining strict adherence to standards is essential for sustained success in intraday trading.

Intraday trading is a profitable strategy for those seeking to make a profit in the stock market and by utilizing a reliable share market app can greatly enhance your trading experience and efficiency.  One must approach it with a practical mindset and understand market dynamics to succeed. Thorough research, staying updated on domestic and international markets, company updates, and government announcements that impact the stock market is crucial. Studying individual stocks helps identify liquid assets for intraday trades. Effective risk management is also essential, including clear trading rules, acceptable loss limits, and stopping losses. One can increase their chances of profiting in intraday trading by implementing proven tactics and adapting to market conditions.

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Profit in intraday trading FAQs

Yes, profit from intraday trading is taxable.

There is no minimum investment amount for intraday trading.

According to the Securities and Exchange Board of India (SEBI), intraday trading profits are credited in T+1 days.

In a five-business-day period, you can't buy or sell the same stock more than four times.

The intraday trading chart represents how price movement is expressed over a period of time