Intraday trading is a popular method of trading in the stock market where traders buy and sell stock within the same trading day.
This approach allow traders to capitalize on short-term price movements, making it an attractive option for those looking to make quick profit.
If you’re wondering how to make money in intraday trading, understanding the fundamentals is most important.
Intraday Trading Meaning
“The term “intraday” refers to the buying and selling of financial instrument within a single trading day. “
Unlike long-term investing, where stocks are held for month or years, intraday trading focus on short-term price fluctuations.
Traders aim to profit from these small price changes, often executing multiple trades throughout the day.
Best Intraday Trading Strategy
To succeed in intraday trading, having a solid & practical strategy is essential. Here are some of the best intraday trading strategy:
Scalping
This strategy involves making numerous trades throughout the day to capture small price movements. Scalpers aim for quick profit and often hold position for just a few minutes.
Momentum Trading
Traders using this strategy look for stocks that are moving significantly in one direction on high volume. They buy stocks that are trending upwards and sell those that are trending downwards.
Range Trading
This strategy involves identifying support and resistance level. Traders buy at support and sell at resistance, taking advantage of price fluctuations within a defined range.
News-Based Trading
Traders react to news event that can impact stock price. This strategy requires staying updated on market news and understanding how it affects stock movements.
Best Indicators for Intraday Trading in TradingView
Using the right indicators can significantly enhance your intraday trading strategy. Here are some of the best indicators to consider:
- Moving Average: These help smooth out price data and identify trends. The 50-day and 200-day moving averages are commonly used.
- Relative Strength Index (RSI): This momentum oscillator measure the speed and change of price movement. RSI above 70 indicates overbought condition, while below 30 indicates oversold condition.
- Bollinger Band: These bands consist of a middle band (SMA) and two outer bands. They help identify volatility and potential price reversal.
- Volume: Monitoring trading volume can provide insights into the strength of a price movement. High volume often indicates a strong trend.
Intraday Trading Time: When to Trade
Timing is crucial in intraday trading. The best times to trade are typically:
- Market Open (9:30 AM – 10:30 AM): This period often see high volatility and volume as traders react to overnight news.
- Midday (11:30 AM – 1:30 PM): Trading volume may decrease, leading to less volatility. Many traders take a break during this time.
- Market Close (3:00 PM – 4:00 PM): Similar to the market open, the closing hour can see increased activity as traders finalize their position.
Is Intraday Trading Profitable?
Many traders wonder, “Is intraday trading profitable?” The answer is Yes, but it requires skill, discipline and solid strategy.
While some traders make significant profits, others may incur losses. It’s essential to manage risk and not invest more than you can afford to lose.
Tax on Intraday Trading
Understanding the tax implication of intraday trading is vital. In many countries, profits from intraday trading are considered short-term capital gains and are taxed at a higher rate than long-term investment.
It’s advisable to consult a tax professional to understand your obligations and ensure compliance.
Is Intraday Trading Halal?
For those concerned about the ethical implication of trading, the question arise: “Is intraday trading halal?” The answer can vary based on individual belief and interpretation of Islamic finance principles.
It’s best to consult with a knowledgeable authority on Islamic finance to determine what aligns with your values.
Best Intraday Trading Apps
Choosing the right trading platform can enhance your intraday trading experience. Here are some of the best intraday trading apps:
- Dhan: Provides advanced trading tools and real-time market data.
- 5paisa: Offers a user-friendly interface and a wide range of investment option.
Intraday Trading Course: Learning the Rope
If you’re serious about learning how to make money in intraday trading, consider enrolling in an intraday trading course( Free on Youtube). These courses can provide valuable insights into market analysis, trading strategy and risk management.
Look for courses that offer practical training and real-world examples.
Conclusion
In summary, learning how to make money in intraday trading involve understanding the market, developing effective strategies and using the right tools.
By focusing on the best practice outlined in this guide, you can enhance your trading skills and increase your chance of success.
Whether you’re a beginner or looking to refine your approach, continuous learning and practice are key to thriving in the world of intraday trading.
