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Before beginning your intraday trading, it is crucial to understand the basics and strategies to avoid losses while gaining multiple profits in a day. One important tip to remember in Intraday trading is – time is money. You cannot bargain at the right time to invest in stocks. The better you time your investments, the better your chances are for profits during intraday trading time. ShareKhan helps you understand the value of time in intraday trading and helps make important strategies.
Significance of Time in Intraday Trading
As the name suggests, intraday means “in a day”. So, you can guess how important time becomes when you are buying, holding, and selling your securities within a business day. Before online trading became a trend, intraday trading was too risky for mediocre traders. It was practised only by expert traders and financial companies to grow capital.
So, what is the formula to gauge the right intraday trading time? There is no such formula to get your timing right, and there never will be. It all depends on your expertise in understanding market movements and choosing the right intraday trading stocks.
An initial reminder is that the market is the most volatile when it opens. It deals with the pending orders from the last day of closing, which spikes the volatility. So, it is not wise to choose intraday trading time close to the market opening. It is suggested that you start trading an hour later than the opening time and end almost half an hour before the market closes. This way, you can dodge both the opening volatility and the exit rush.
Here, a complete knowledge of the market swings and stock trends is necessary, as it is the only way to help you understand where to invest. While the market is bullish, trading with strong stocks is profitable. When they go up, they tend to retain their position for a day. Similarly, a bearish market calls for trading in weak stocks. You should not try intraday trading when the market seems to have no relative movement, i.e., stalling.
Must-Know Intraday Strategies to Take Advantage of Time
To get the best opportunities using good timings, here are some amazing Intraday trading strategies listed below:
- Breakout Trading Strategy – This strategy shows how important it is to time your buys and sells in intraday trading. You need to map threshold points at which the selected stocks might see a breakthrough, i.e., go up or fall. The live trading graph of the stocks will show its current course, which will determine if you can hold it for a long position or a short one.
- Moving Average Crossover Strategy – Watching stock market news and listening to expert advice can help determine the moving average of stocks in the market. The average line shows if the stock is facing an uptrend or a downtrend. You can place your trading bids according to the market trends. The key focus in this strategy should remain on choosing the right stock at the right point of its moving average.
- Momentum Trading Strategy – This is the most commonly used intraday trading strategy where you do your research and find the right stocks to invest in. Market momentum is determined consequent to external factors, like budget declarations or political moves, and affects the market movements positively or negatively. You should be quick to decide as this strategy requires speed in optimising the momentum.
- Gap and Go Trading Strategy – Sometimes, the market opens with gaps in the previous-day values of some stocks. These gaps are caused when the stock closes at a different value the previous day than what is shown in the opening on the next day. The gap and go strategy calls for intraday trading, assuming that the stocks might fill the gaps before the market closes.
- Reversal Trading Strategy – This is the riskiest strategy under intraday trading and is, therefore, not recommended for beginners. It is assumed that a market trend might pull back and give strong profits, thus, trading and moving against the current trends. It is quite difficult to predict the pull-ups correctly and requires extreme expertise in market interpretation.
Endnotes
The most important part is taking quick and concise actions as per your chosen strategy. Though there can be several other strategies to trade, the ones listed above are the most popular ones. Apart from timing your buys and sells, you must also learn to choose the right stocks for day trading. The right stocks at the right trading time can get you great profits before the market closes for the day. Educate yourself about the latest market trends and strategies used by experts at ShareKhan, India’s leading broking house, which serves as a one-stop solution for all services related to online trading and research of financial products.
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