Overview
Intraday trading is a complex trading style which requires top quality skills to master and earn income consistently from the markets. Beginners should start intraday trading only after acquiring relevant market knowledge and market psychology. Beginners who start intraday trading without enough knowledge will be lucky enough to win a couple of trades but in the long run being a profitable intraday trader requires more skills than any other trading method. Intraday traders take advantage of short-term price fluctuations in the market to make an income. Let’s closely understand the skills and relevant knowledge required to start intraday trading as a beginner.
Open a trading and Demat account
A trading and Demat account is a brokerage account that allows the traders and investors to buy or sell stocks. It is better for traders to open a trading and demat account with discount brokers as they have very less brokerage as compared to other full-service brokers. As a beginner the primary step is to open an account with a discount broker and understand the about the various order types and basics. Apart from trading, demat accounts are also used for holding stocks, mutual fund units, bonds, and other securities.
Leverage
The major advantage of being an intraday trader is the leverage facility offered by the brokers to traders. Leverage trading is a type of trading that allows investors to trade with borrowed funds from their brokerage firm. By using Leverage, investors can leverage their capital to increase their buying power and potentially earn higher return. This leverage trading can also create huge losses to traders so as a beginner having a good risk management is very relevant. It is better for beginner intraday traders to stay away from leveraged position until they have good experience and trading system.
Target and stop loss
Keeping realistic target and target and stop loss is the key of successful intraday trading. The most essential concepts in trading that help investors manage risk and maximize profits is target and stop loss. By keeping a target in trade, traders can determine when to book their profits and exit a trade. By keeping a stop loss in trade, traders can limit potential losses and manage risk. Beginner intraday traders have to be very disciplined to follow target and stop loss in their system and have to keep emotions away from market to become successful.
Charts , Tools, Candlestick
Charts, technical indicators and candlestick analysis are a part of technical analysis. Intraday traders must master charts, candle stick analysis and technical indicators to become successful in trading and to get lucrative returns from the market. Charts and technical indicators provide better insights to traders helping them take intelligent positions in the market. Intraday traders utilize the market fluctuations in market to make an income. Technical indicators and charts help traders to understand the market movements and take positions accordingly.
Technical analysis
Intraday traders must learn and master the technical analysis to take intelligent trades in market and to keep proper risk to reward ratio. technical analysis is a method of analyzing stock or any financial instrument by using statistical data, price charts, and other market indicators to identify patterns and trends. Technical analysis helps traders to take high probability trades in market and keeps them profitable. Technical analysis is also used by swing traders and investors to understand the buying point and exit points of an asset class.
Technical indicators
Technical indicators help investors to give more insight to the market trend. Technical indicators are mathematical calculations based on market data and are important tool for traders to make informed trading decisions based on objective data. Moving average and RSI are the most used technical indicators. Traders have different trading style and use different technical indicators which are suitable for their trading system. Technical indicators should not provide accurate information, they have to be merged with market conditions and candle sticks to get more insight about the market movements.
Risk And Money Management
Risk management and money management are the golden tools used by traders and investors to brace themselves when the trade goes wrong or there is a panic in market. placing stop-loss orders, diversifying their portfolio etc are part of risk management. Position sizing is the key of money management. Money management involves allocating capital effectively to maximize returns while minimizing risk. Beginner intraday traders should not focus much on profits and must give more priority to acquire market knowledge and risk management.
