How to make money in Intraday Trading?

Trading in the stock market always comes with risk and if not done with adequate research and precaution can lead to huge losses, With the right strategies and proper analysis you can also make money in intraday trading on a daily basis but learning how to make a profit in Intraday trading is the key.

 

There are different types of trading and investment strategies But the question here lies: Is Intraday profitable than Investing? Investing in the stock market is like an ongoing and uphill journey where you have to be patient and strategic in your approach. At the same time, trading is a downhill walk that can give you benefits in the short term if you apply the right strategies and stay disciplined in the stock market.

 

Before investing in any stock you need to know the Do's and Don't of Investing and trading

 

What is Intraday trading?

Contrary to investing, Intraday trading is the strategy of buying and selling shares on the same day of the stock market. It is also called day trading and its primary purpose is to earn profits through market indices.

 

Intraday trading is not done for investing but with the purpose of earning quick profits by predicting market movements. This kind of trading can be done in almost all types of stocks.

 

 

Let’s understand what is Intraday trading with the help of an example:

The price of a stock is 500 in the morning and by evening (3:15-3:30 PM) it rises up to 550. You have already purchased 1000 shares of that stock in the morning and if by evening (3:15-3:30 PM) you sell all these stocks, then in a few hours only you will earn a profit of 50,000. This is how Intraday trading works.

 

Though Intraday trading may look as an interesting money-making opportunity but can government employees do intraday trading? According to Section-16 of the Central Civil Services(conduct) rule 1964, government employees cannot do Intraday trading.

 

 

Intraday Trading Indicators

Intraday trading has its share of risks associated with it as a trader deals in a volatile market while executing orders in Intraday trading. So here are some of the best indicators for Intraday trading that help a trader to make money in Intraday trading.

 

1). Moving Averages

The majority of stock traders are dependent on the daily moving average (DMA) of the stock. This moving average which is one of the best indicators for Intraday trading is a line on the charts that depict a stock’s behavior for a particular period of time and these charts show the opening and closing rates of a stock.

So, with the help of this minimum average line, Intraday traders get an idea of the average closing rate and fluctuations in the price of a particular stock which assists them in making the right calls regarding their stocks.

 

2). Bollinger Bands

These bands consist of three lines which are upper limits, lower limits, and moving averages. Whenever a particular stock's trading range is analyzed, it becomes easier to locate the price variation and action can be taken accordingly.

 

3). Momentum Oscillators

Momentum oscillators measure how much a stock price has changed over a certain period of time and help intraday traders in predicting the prices of stocks to go up or down.

It ranges between 1-100 and assists traders in making a decision on whether to buy a stock based on the price movements of stocks between 1-100.

 

4). Relative Strength Index

Also known as RSI, is between the range of 1-100 and shows graphically at what price point shares should be bought or sold. It is a line graph that indicates the movement in recent stock prices and helps traders assess whether the stock is in an overbought zone or underbought zone.

If the stock price is above 70 it is considered to be in the overbought zone whereas if its price is below 30 then it indicates an oversold zone.

 

These are some of the best indicators for Intraday trading that can also be termed as special friends of an Intraday trader as they keep giving a trader momentarily updates on profits and losses so they can make profits and are saved from losses. Therefore, to be a successful Intraday trader, it is very important to understand all these indicators.

 

 

Intraday Trading Strategies

Many aspiring full-time traders often ask this question - how to make money in intraday trading? For those seeking answers, here are some of the most effective intraday trading strategies that traders can use to earn profits from the stock market within a single day.

 

1). Scalping

It is one of the important Intraday trading strategies with the help of which an Intraday trader is able to multiply small profits in a single day because of small changes in stock prices. With the help of scalping, a trader can multiply his profits given that he executes the exit strategy well.

For executing a scalping strategy, a trader very much relies on technical indicators such as candlestick patterns and MACD, Supertrend, and RSI indicators. Get to know in detail what is scalping and how it works in the trading world.

 

2). Range Trading

With the help of range trading, day traders identify the range of buying and selling stocks in a short period of time. It is a popular trading that helps traders in identifying oversold and overbought zones of assets (also known as resistance and support zones).

Intraday traders identify these zones by analyzing indicators and buying assets during oversold or resistance periods and selling them during overbought or resistance periods.

 

3). High-Frequency Trading

This complex algorithm is a type of financial trading that is used to transact multiple orders in a fraction of a second. This trading strategy uses complex algorithms to analyze multiple market conditions and place orders based on them.  

With the help of this strategy, companies place multiple orders in seconds which creates liquidity in the market and allows them.

 

4). News-Based trading

In this trading strategy, with the help of multiple news sources, traders try to identify such events that could affect stock prices and earn profits from them.

For example, if traders find out from a news source that Company A plans to acquire Company B, such news could create volatility in that particular stock and traders could make a profit from the news by using it in their favor.

 

These are some of the best Intraday trading strategies which an Intraday trader can use to make profits from the stock market in a single day.

 

 

How to select Intraday stocks?

Using these successful Intraday trading strategies you can become an Intraday trader, and now that you are interested in becoming an Intraday trader, you would want to know how to select Intraday stocks.

The most important and foremost step in Intraday trading is how to select Intraday stocks that will give you good returns which is the ultimate aim of an Intraday trader. So it is important to keep these things in mind while choosing stocks for Intraday trading:

 

1). Select high-volume trade:

Changes in the price of a stock in the long term do not affect the profit margin of traders that much as the overall gains for day traders are made from high volumes of trading.

While choosing stocks for Intraday trading you should go with stocks with high-volume trade which are highly liquid such as large-cap and blue chip stocks which are shares of well-known companies.

 

2). Choose the right stocks

It is always advisable to avoid relying on random tips from unreliable or unverified sources. It is always better to do your own research and analysis before trading.

You should avoid volatile stocks. Instead of putting your money on those stocks which you find unstable, you should identify those stocks which are stable and put money in them as it will help you in squaring off your position.

 

3). Select a maximum of 2-3 stocks at a time:

You should keep in mind that while day trading you should not pick more than 2-3 stocks in a day because more shares can get difficult for a trader to track.

 

4). Decide a Price

As a trader, you decide a price at which you are willing to buy or sell a stock and choose those stocks in which your entry and target prices are clear. At the same, you should also set a stop-loss order, so that your risk is minimized.

Stop-loss is an advanced order to sell a stock, where a stock is automatically sold when its price reaches a certain limit. Stop loss can be a crucial strategy in reducing your losses. Get to know about what is stop loss and why is it important for traders.

 

5). Monitor your progress:

You should monitor your order after placing it and once your order reaches the target or stop loss levels, then you should make an exit.

It is important to understand that the entry level is related to the purchase price and the exit point is related to the selling price. The target price is the estimate of the future price.

 

6). Select your trades in line with the market trades:

While day trading it becomes important to select your trades in line with the market trades because mostly those stocks which are in trend give you the profits.

 

7). Always start trading after proper research

The most important thing to remember while doing Intraday trade is that you should always trade after doing proper research and analysis as trading in the volatile market with proper research can lead to huge losses also.

Though research is important before trading still it should not be too extensive, analyzing and making sense of the current market situation is vital, and to do this it is important to successfully understand the daytime price projections which are more often than not sufficient for Intraday trading. So that now you know the tricks and trades of how to money in Intraday Trading, you can learn how to start Intraday Trading.

 

 

Conclusion

There is no one-size-fits-all approach to Intraday trading but there are some strategies and tips that you apply that could minimize the risks associated with trading and helps you achieve maximum profits from your trade in a single day.

Although the risk is an inherent part of trading, especially Intraday trading but with the right mindset and approach, you can capture the market volatility and benefit from the fluctuations of the stock market on a daily basis.

 

FAQ

Ques1. Is Intraday Trading Profitable?

Ans- Trading can be profitable, but the key to success is knowledge and an understanding of the market, price movements, and the sector in which trading takes place. A trader who studies markets can make good profits in intraday trading.

 

Ques 2. How Much can You Earn from Intraday Trading?

Ans. The amounts of money you can make through trading can reach thousands, lakhs, or even more. Intraday profits are dependent on a few key factors:

• What is the amount of capital you invest every day in the markets?
• What is the maximum risk you are willing to take on your bets
• Expertise in trading and technical indicators.
• Patience.

By evaluating intraday metrics, you may be able to double or even halve the amount you put into a single trade.

 

Que 3. Is Intraday trading advisable for new investors?

Ans. Intraday trading comes with a higher degree of risk, and new investors often find it difficult to choose the right stocks for Intraday trading and eventually end up losing money. Intraday trading provides an opportunity for all investors if they keep in mind some important factors, such as

• Time your move wisely and enter and exit the market at the right time.
• Take historical patterns into consideration.
• Remain calm and alert to avoid panic buying or selling
• Start small and trade in limited stocks, which you can track

 

Que 4. What is the best time for Intraday trading?

Ans. Intraday trading is a trading strategy that is mainly based on price actions and volume breakouts. The Indian stock market engages from 9:15 am to 3:30 pm. A day trader can divide the market into three phases:

Phase I -  9:15 am - 11 am

Phase II -  11 am - 1:30 pm

Phase III - 1:30 pm - 3:30 pm

Intraday trade is backed by high volumes of trade which is an important input even by the Dow Theory. The stock market generally witnesses higher volumes in Phase I and Phase III, which makes it more appropriate for Intraday trading.

 

Que 5. How are the profits from Intraday trading taxed?

Ans. The profit which you earn from Intraday trading is termed speculative income. It appears under the heading “Income from business or profession.” When you make a profit in Intraday trading, it’s added to your total income, and you are taxed depending upon which tax slab you fall under.

 

Que 6. What is a margin facility for Intraday traders?

Ans. Margin trading is a facility provided to Intraday traders, which is an Interest-free loan provided by brokers to Intraday traders to buy more shares for that than the cash they currently have.

As they say, with higher risk comes greater profits, but there is no such guarantee to these returns, and it could, in return, turn out to be huge losses for an Intraday trader. So, an Intraday trader has to keep his risk-taking appetite in consideration before availing of such a facility.

 

Ques 7. Highest Intraday Profit in India

Ans. Ghanshyam Yadav recorded the highest intraday profit in India by earning 2.65 crores in a day. His accomplishment was showcased on videos by Satish K, highlighting exceptional trading skills and strategic decision-making.