10 Day Trading Strategies For Beginners

The post-budget rally continued with the Sensex surge, led by financial and technology stocks. The probability of high returns allures investors to be active market participants in the stock trading. 

Intraday trading is the most popular trading strategy among short-term traders. Day traders are bound to close all their positions in the same trading session before the market closes. 

There can be a huge difference between one day’s close and the next day’s open price, leading to huge losses on substantially high volume trades. Therefore, closing every trade in the same trading session is necessary to avoid unmanageable risks due to unfavorable price gaps. When you open a trading account online with a stockbroker, you can check their extended-hours trading facility. 

Day traders can buy and sell a variety of financial instruments within a few minutes. They analyze recent trends intended to make well-strategized trades. Day trades can be based on a 5-minutes chart, 15-minutes charts, or hourly charts. With an online demat account and trading account opening facility, stockbrokers offer research reports to help traders.

To create an effective day trading plan, every intraday trader must be disciplined and adhere to basic strategies as thumb rules. Here are the ten basic strategies for intraday traders:

• Knowledge is power – scan the market to gain knowledge.

Day trading is extremely risky. Verify the rumours on news and place a trade only if you are confident about the impacting information. Intraday trading requires a trader to be updated even with small movements in the stock market as it can impact the market outlook. Make sure you go through reliable financial websites only. 

• Start small 

A day trader, especially newbies, should stick to their budget and make small trades with a great focus on finding opportunities. You can try to only focus on one to two stocks during a session to start the journey. 

• Set aside funds for estimated losses

The risk profile varies for every trader. In intraday trading, it is about how much a trader is willing and capable to take the risk on each trade. You need to set aside a surplus amount equivalent to the estimated losses. Experts suggest traders keep a 1% – 2% amount per trade. 

• Set aside your dedicated time to the stock market.

Day trading needs dedicated time as learning about the market is a time-consuming process. It is not about spare time only. To spot opportunities available in the market, you need to be dedicated.  

• Avoid penny stocks.

Low price deals are attractive for everyone. The stock market is not an exception. Penny stocks are among such deals. Make sure you do not fall for penny stocks unless you find a genuine opportunity based on your thorough research. 

• Look for low volatility hours.

It may be easy for experienced players to determine market trends in rush hours, but a novice may not be able to do it. Rush hours are full of liquidity, but beginners should avoid trading during highly volatile hours. The middle trading hours are less volatile than opening hours.

• Stay realistic and set achievable profit targets.

It may happen that a trader makes a profit of 20-30% in one trade. It does not mean that the trader will be in profit every time. Instead of making numerous trades in the expectation of unrealistic profits, place limited trades to achieve reasonable targets.

• Take care of the type of order you place to limit losses. 

A trade can be a market order or limit order. A limit order guarantees the price you want, but not the execution. When you place a market order, there will be a trade execution guarantee at the current stock price, not at the willing price. Limit order trades are more precise and day traders use it to trade securities at a willing price. 

• Let the market volatility test your patience. Stay Logical.

To fight against stock market volatility, you need to be patient. Make sure emotions do not affect your trading decisions. Successful day traders stay logical to govern the right decisions instead of being greedy or fearful. 

• Be clingy to your trading plan.

Successful traders remember this statement – “Plan your trade and trade your plan”.  Speed is the quality of day traders, but it is more important to develop a trading strategy and stick to it instead of chasing profits. You can use a trading app for easy trading.

Thus, the stock market is highly risky, especially when it is about intraday trading, and you should handle the risk with proper strategies instead of considering it a quick way to make money. Keep investing your time to understand the market and make your trades rewarding.