Traders have many times spelled the words of wisdom for intraday trading that it involves a huge amount of determination and discipline than talent and flair. There’s also an observation that traders who consider and handle intraday trading as a process are more likely to become successful than traders who aim at buying low and selling high.
The sacrosanct of intraday trading in Zerodha lies in breaking the enigma of how and when to exit and enter the stocks. In the actual world, it is tough to buy low and sell high, possible only in papers. What’s important is understanding trends and the ability to transform them into high-yielding stocks. We present to you the rules of positively utilizing the entry and exit in intraday trading that have been thought upon seeing the trade patterns of the best stock broker in India.
There are numerous factors involved in successful intraday trading but let’s have a look at the prominent entry and exit strategies that have turned the fortune for traders.
1. Never participate in intraday trading without fixing a stop loss. Stop losses are necessary for numerous trades but are quintessential in intraday trading. Individuals must not try to become a default investor, instead of practice intraday trader by design.
2. If stop losses aren’t applied then traders might end up holding unmanageable M2M positions incurring losses. As discussed already, along with stop loss level identification traders must also include stop loss for buy and sell orders as well.
3. As important is setting a stop loss for an intraday trade same holds true for setting a profit target. Individuals must have clear immunity towards risk. As per the experts, a risk/rewards ratio of 2.5:1 or 3:1 is considerable. But demanding a 1:1 ratio isn’t viable.
4. Traders must fix the profit target as per the risk-return trade-off and visualize the profit target beforehand while placing the order as well. In fact, if traders can efficiently employ bracket orders and cover orders in intraday trading, they can take benefit of greater leverage and can handle capital properly.
5. The most basic rule of dedicated entry is to refrain from averaging positions. Many rookie investors have been found to buy more units of a stock when it improves.
6. Averaging isn’t trustworthy for many reasons. Firstly, a trader has twice the risk exposure. Secondly, a trader encounters increased exposure to dedicated downtrend or volatility more than the permissible limit as it will widely risk your capital.
7. There’s another dimension to the story. If something appears flowery then it is probably good. This holds true especially when your position begs profits within the initial hours of trade. One must not ride the luck tide for too long. Just record profits and walk peacefully.
8. Take note of trends and always trade on the appropriate momentum side. Remember that trend is a trader’s best pal in intraday trading. Never try to outsmart the market. If you get strong intent of the strong underlying trend then never focus on shorting the market. You either buy on dips or buy for momentum. This factor is where an intraday trader has to rely on different dynamics than an investor.
9. Entry and exit relies heavily on news, charts, and data. Learn to infer data from charts. It might seem complicated in the beginning but it is surely no rocket science. You must be well versed with the basics of resistances, supports, stochastic, moving averages, etc.
10. Keep a keen eye on the news, track movement of top 10 stock brokers in India, otherwise, you will eventually fail as a trader. Evaluate the impact of macros and news. Evaluate the flow of results, announcements, and corporate actions. All these are important essentials that are benchmarks of an informed trader. Besides these, F&O data points like open strike accumulation, open interest, Put-Call Ratios, and IVs are essential indicators of intraday trading.
Entry and exit are quintessential for intraday trading, with market volumes and charts playing a crucial role as well. But it also involves the right amount of discipline.
FAQs
1. Does intraday trading require discipline?
Ans - Yes, the display is of the utmost importance when performing intraday trade.
2.How can traders maximize profits in intraday trading?
Ans - Traders can sense the market dynamics for performing well with intraday trading.
3. Is intraday trading profitable?
Ans - If done in the right way intraday trading can bring humongous profits.