Intraday trading refers to a form of stock trading that’s similar to day trading but done during the hours that the stock market is open. Intraday traders tend to hold positions for short periods of time and utilize technical analysis extensively, looking at charts, volume and price movements, and other indicators as they make decisions about trades based on current conditions in the market. If you’re interested in giving intraday trading a try, here are some tips on how to start intraday trading from zero level.
What is intraday trading?
Intraday trading is a type of speculation that involves buying and selling stock within one day. This usually entails holding positions for short periods of time, with profits made on tiny price changes rather than long-term market trends. It is not uncommon for intraday traders to hold positions for less than an hour before closing them out. The Securities and Exchange Commission (SEC) recommends that those who plan on participating in intraday trading have enough knowledge and experience to be able to do so without creating substantial risk or losses.
Requirements
Before making any investment decisions or opening a new brokerage account, we strongly encourage you to consider your financial needs and seek advice from a professional. You should read all relevant information relating to each financial product carefully before deciding whether or not to acquire it. The value of your investments can go down as well as up and you may get back less than you invest. (Changes in currency exchange rates may affect local prices). Please note that intraday trading is suitable for experienced investors with high levels of market understanding.
When to trade
Once you’ve established what type of day trader you want to be, when you trade is important. Some people believe it is best to start trading early in the day, while others prefer mid-afternoon or even evening. This is a personal choice and is based on your own schedule, lifestyle and attitude toward market fluctuations. Whatever time of day suits you best will become your trading time – set that as your standard no matter what.
Charts & technical analysis
There are two kinds of charts that you should be familiar with as an intraday trader: candlestick charts and bar charts. Candlestick charts, which display information over a period of time using rectangles that resemble candles, allow you to see how a security closed at its high and low during a specific time frame.
Tools
Trading account, financial charts and software like MT4. If you have already opened a forex account, you can use it for intraday trading. To open an account, search on Google Intraday trading with Forex broker or Forex broker (Name of Broker) intraday trading or similar phrase. Then fill out application and select payment method which can be by wire transfer, credit card etc.
Common mistakes
There are several things that beginners in intraday trading do that they should avoid. The common mistakes include rushing into trades, using an unproven strategy, not tracking results and trying to rely on tips from other traders. Often a trader will be tempted to skip analyzing a trade because there is a hot tip available for instant gratification; however, it's very important for any trader to learn how much risk he or she can handle and how much reward he or she expects from each trade so that no money is lost unnecessarily. Even more importantly than analyzing your own strategy is learning how others work by carefully observing them. This way you can figure out what works best for you while avoiding their costly errors (that is if they have any). Remember not every style of trading works well with every person - try different strategies until you find one that suits your personality and needs!
Money management
The concept of money management is simple. It’s all about controlling risk through various methods and has nothing to do with how much money you have or don’t have. While it’s true that having more capital may allow you greater flexibility in your trading, when it comes to executing a successful intraday trading strategy, discipline and patience are two characteristics that make all of the difference.
Keeping track
If you’re trading for yourself and not as a company, then keeping track of your investments is a crucial task. If you use an online broker, like E*TRADE or Scottrade, they provide free tools and tutorials. If you’re using another brokerage (Charles Schwab or TD Ameritrade), it doesn’t hurt to call and talk with someone who can walk you through all their features—and even help with downloading investment apps on your phone.
Case study
One of the advantages of intraday trading is that it’s easier to start than opening an account in a traditional investment vehicle like stocks and bonds. Not only is it less expensive (with no recurring costs), but you also don’t need any specialized knowledge, experience or training. That said, with its ease of entry, there are plenty of pitfalls for novice traders as well.