How To Make Money In Intraday Trading (2024)

Understanding Intraday Trading

Intraday or day trading involves buying and selling stocks on the same day. The goal is to profit quickly from fluctuating share prices throughout the day. The intraday trading starts as soon as the stock exchange opens the day for trading at 9:30 am and must be squared-off by 3:30 pm.

For example, if you buy 100 shares of an X company for INR 10,000 and close the deal when its value reaches 11,000, you profit from INR 1,000 daily.

Intraday trading is a high-risk, high-reward strategy. However, if your prediction decisions don’t work out, you can face significant losses compared to a regular trader.

Steps To Make Money with Intraday Trading

As the name suggests, intraday trade occurs during the day. Traders can place orders when the stock exchange opens for the day and must be squared off by 3:30 p.m. According to trading experts, the ideal timing for intraday trade is between 10.15 a.m. and 2.30 p.m.

Here’s a step-by-step process to enter intraday trading.

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Select a trading platform: Various trading apps like Zerodha Kite allow trading in the stock market. They provide brokerage services to buy, sell, modify, cancel, and monitor your orders. It contains real-time market data and analysis in which you can invest or enter intraday trading. You can also choose an offline method to consult a share broker to enter the intraday trade; however, the trading happens according to the broker’s recommendations.

Use the intraday calculator to enter the trade: Most online trading platforms give you access to an intraday calculator, also known as a brokerage calculator. You can enter the number of shares you wish to buy and sell and their current value in the market, and the calculator gives you an overview of charges related to the trade. These charges include brokerage fees, stamp duty charges, transaction fees, SEBI turnover fees, GST, etc.
Place your intraday trade order: Using the stock trading platform, you can place orders to buy or sell a company’s stock in real-time. Intraday traders need to understand how buyers and sellers place their trades, have knowledge of various types of intraday trading charts and terminology, and have a deep understanding of market trends.

Things To Know Before You Start Making Money with Intraday Trading

Intraday trading shouldn’t become a routine trading activity. Take a break and instead focus on the task requiring immediate attention. There are pros and cons involved in intraday trading, including the following.

1. Stock selection: Stock selection is crucial for making profits in intraday trading. Choose quality stocks to trade. You may want to exit the position as soon as you incur loss and think twice before investing in the same stock, as such investment may increase risk.
   
2. Follow strict stop-loss on noisy days: Traders make significant profits during major events, such as the Union Budget announcement; however, the market can be very volatile. Following the strict stop-loss on noisy days can save your investment from capital loss.
   
3. Intraday fees: Remember, various fees are associated with intraday trading. A trading platform usually levies brokerage fees, stamp duty charges, transaction fees, SEBI turnover fees, GST, etc.
   
4. High stress and time-consuming: Intraday trading can be very stressful due to continuous price fluctuation in the market, and you may be required to spend hours tracking the price movement. It requires a dedicated commitment to invest time and energy.

5 Strategies to Book Profit from Intraday Trading

Besides the obvious purpose of entering and exiting the trade within a day, intraday traders use popular strategies to make profits. Here are five popular strategies used by intraday traders that include the following.

• Pay attention to the news: Keeping yourself updated about major events like the Union Budget, elections, monetary policies, and even before or after a public company releases the quarterly earnings report are common approaches. This strategy helps traders predict how asset prices will move in response to major news events.
  
• Range trading: This strategy requires traders to pay close attention to identifying the stock’s price range to buy and sell over a short period. A skillful range trader knows precisely the timing to execute orders, as inaccurate predictions may result in significant losses.
  
• Scalping: This strategy involves buying and selling a company’s stocks numerous times throughout the day to make small profits from every order.
  
• Momentum trading: Momentum investors try to take advantage of past price movements of a company’s stock to predict its future price.
  
• Leverage: Leverage in trading is called buying on margin to use borrowed money to purchase a company’s stock. This strategy requires a deep understanding of market trends as it substantially increases the risk of losing money.

Frequently Asked Questions (FAQs)