Typically, most intraday traders don’t make large profits during the course of a day. It is seen that when traders profit on one day, they may incur a loss on the next day, if there is a correction seen in the market or if they have dealt in the wrong choice of shares.
When traders begin to book losses, they realise how critical it is to enter and exit intraday trading. Regardless of the reasons behind it, it is important for every trader to comprehend the basics of intraday trading. If you are looking to make day trading as your sole source of income, through a well-known broker such as Kotak Securities, here are some intraday tips to help you enter and exit in intraday trading.
- Selecting the right stock: Most the traders rely on stocks that offer liquidity and ones that are volatile. While liquidity can mean that a greater volume of stocks is traded, volatility can help in bringing higher profit margins due to its price movements. Taking a cue from this, as a day trader, you will be able to evaluate the right time for entry and exit without hassle.
- Understanding the drift in the market: If you have stocks that go with the market flow, it means you have excellent stocks for intraday trading. This is because how these stocks move is an indication of the index movement. For example, oil and gas stocks are greatly influenced by global crude oil prices. Understanding the fluctuation in this sector can help you forecast the movement effortlessly.
- Knowing the right price: Most traders employ many strategies to determine the right price in order to evaluate their entry and exit points in intraday trading. One such method is making use of support and resistance prices of the stock to justify their grounds for entry and exit. The tip here is to buy a particular stock when it advances beyond the support price, and sell it instantly when it accomplishes resistance levels. Most traders book their profits the moment they notice the stock is becoming profitable. On the other hand, some others prefer riding the wave. Regardless of your strategy, it can help to trade wisely and in a disciplined manner.
- Stop loss: Considered one of the most crucial principles in intraday trading, stop loss plays a critical role in avoiding further losses. Some traders hold onto their stocks even when the price collapses, believing that such stocks could pick up the next day or shortly. However, this could lead to grave losses. Financial experts recommend booking small losses in a day than accumulating losses every day after assuming delivery. Since, one cannot predict if a particular stock will recover and when, it is strongly advised to maintain a stop loss, and exit a stock when its price starts to fall down.
The points mentioned above can help you to discover your potential entry and exit points in intraday trading. By being consistent and disciplined, and keeping your emotions at bay, you will be able to determine the day trading entry and exit points at the right time.