Intraday trading

Intraday trading refers to the practice of buying and selling financial instruments within the same trading day such that all positions are usually closed before the market close for the trading day. Traders that participate in day trading are called active traders or day traders. It seemingly looks to be the simplest and the most rewarding. But in intraday trading one has to be very fast and quick and have to be on your toes always, so there are certain rules which one has to keep in mind. Some Intraday traders focus on very short-term trading within the trading day, in which a trade may last just a few minutes. Intraday traders may buy and sell many times in a trading day and may receive trading fee discounts from their broker for this trading volume. Some Intraday traders focus only on price momentum, others on technical patterns, and still others on an unlimited number of strategies they feel can be profitable. Because of the nature of financial leverage and the rapid returns that are possible, intraday trading can be either extremely profitable or extremely unprofitable, and high-risk profile traders can generate either huge percentage returns or huge percentage losses. Because of the high profits (and losses) that day trading makes possible, these traders are sometimes portrayed as "bandits" or "gamblers" by other investors. Nevertheless day trading can be very risky, especially if any of the following is present while trading: • trading a loser's game/system rather than a game that's at least winnable, • trading with poor discipline (ignoring your own day trading strategy, tactics, rules), • inadequate risk capital with the accompanying excess stress of having to "survive", • Incompetent money management (i.e. executing trades poorly). The common use of buying on margin (using borrowed funds) amplifies gains and losses, such that substantial losses or gains can occur in a very short period of time. In addition, brokers usually allow bigger margins for intraday traders. Because of the high risk of margin use, and of other intraday trading practices, a intraday trader will often have to exit a losing position very quickly, in order to prevent a greater, unacceptable loss, or even a disastrous loss, much larger than his or her original investment, or even larger than his or her total assets. What to look for while doing intraday trading:

The purpose of intraday trading is to register small profits which can be average out at the end of market sessions. Investor need not wait to book the profits only when there is considerable difference between the last traded prices. Thus book the profits even at the minimum level. They need to do buying and selling on marginal profits; it should not be the situation of the overbought or oversold.

Choose those stocks where there is huge volatility , which means look for stocks which are sensitive to the price volatility , thus the movement of up and down of a share price should be high , they should not be slow moving stocks and momentum should be there every time. The rate should be so high so that the intraday trading can take place and then only aggressive buying and selling will takes place. Such stocks are very sensitive to the daily rum ours and to the news, these are the most traded stock but it may not be necessary that they belong to the blue chip companies only, you can find such stocks in the mid cap section too. Some penny stocks also have big price fluctuation range. An investor need to be cautious that there are many stocks which are quiet for some time on the market and suddenly they gain momentum and will come into limelight, be away from such stocks they do not have any volatility only once in a year or so they become active, such stocks have volatility of only few minutes, again they will disappear.

Not only the price volatility to be observed there are many such stocks that may not have so much fluctuation in price, but they are traded in volumes, an investor can book profits on trading on large volumes at a small price thus the profits can be averaged at the end of the session. A perfect example is Reliance; it is the most traded stock in terms of volumes. Investors’ trade heavily in volumes with such stocks, however such stock may not have price volatility, but they are still favorites among the intraday traders.

One important point to be considered that investor need to be realistic, it may not happen that the investors are every time booking profits, even if they are into loss they should understand how to control such losses and should opt for the stop loss order and they should considered as to how much capital they are committed to put at stake in the market