Overview of Day Trading
Strategies for day trading
Main strategy for day Trading
The primary strategy of day trading is to earn consistent money on daily basis.
Second strategy for day Trading
Observe carefully the stock price movements - Stock price movements like Open, (the first price at which the stock opens when market opens in the morning) High, (The stock price reached at the highest level in a day) Low (The stock price reached the lowest level in a day) and finally Close. (The stock price at which it remains or the final price of the stock when the market closes for a day).
One more important factor to watch is stock price fluctuations. Stock price fluctuations means by how many dollars or cents the stock is moving (either
up or down). This gives you an idea on what price to buy and at what price to sell (or first sell and then buy).
This strategy is very useful for day trading but in fact you get more superior idea (or plan) for TOMORROWíS DAY TRADING for this particular stock.
Keep a close watch on Supply and Demand - Supply and demand means how many buyers are willing to buy (this indicates the demand) and how many sellers are aggressive to sell (this indicates the supply). Always remember the stock price movement depends on supply and demand. Simple thing to remember (not only in stock market or day trading but also in general life) that more demand and less supply means price is going to move up and if more supply and less demand then price is going to come down.
Overcall if you study this strategy carefully then you will come to know whether the people are interested to buy or sell the stock and hence the price moves accordingly that is if see more buyers then the price is going to move up and if you see more sellers then price is going to fall down.
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Day trading made easy
Buying and selling of shares on daily basis is called day trading this is also called as Intra day trading. Whatever you buy today you have to sell it today OR whatever you sell today you have to buy it today and very importantly during market hours that is 9.55 am to 3.30 pm (Indian time).
Advantages of Day Trading
• Margin trading -
In Day trading you get margin on your balance amount means you get more leverages (amount) on your available balance amount to do day trading this concept is called margin trading. Margin trading is only possible in day trading and not in delivery trading. How much extra amount (margin) you are going to get that totally depends on your broker, or your online trading system brokers.
Some broker provides 3, 4, 5, and 6 times extra margin.
If you do margin trading then you have to square off your open trades on the same day (means if you bought shares then you have to sell and if you sold shares then you have to buy)before market time (that is 3:30 PM) finishes.
• Second important advantage is that you have to pay is less brokerage (commissions) on day trading (Intraday) as compared to delivery trading. This brokerage again depends from broker to broker (or on your online trading system).
• In day trading you can sell and then buy this is called short sell which you cant do in delivery trading. You can sell shares when prices are falling and then buy when price falls further.
Disadvantage of Day Trading
• As you are benefited to get more extra amount to trade (that is margin trading) and get more extra profit it is also equally true that you are also taking more risk of loss.
• At any cost you have to square off the open transaction before 3:30 PM (especially if you are doing margin trading) at that time the price may not be in your favor.
Information on Day trading tools
A successful day trader or share market trading requires couple of disciplines and following trading requirements -
• PC with internet - If you need to do trading yourself then you need to have a PC or else you can do trading in internet cafť also. A PC with good internet connection speed. The internet connection should not be slow or should not face any other problem especially in Day Trading.
• Online Trading Account (Demat Account) - You need to open online share trading account with any of the available banks or online brokers.
If you want to know more about demat account then please go to
Basics of share market indian and check in share market and its analysis part.
Day trading stocks
In day trading, traders mostly wish to do buying and selling on small profits or else they look for overbought or oversold shares.
Taking into consideration these important points following basic things you should look in for shares while choosing them for day trading.
• Price Volatility
• Volume (quantity)
What exactly these terms mean and how to use them while Day Trading.
The Price volatility means the movement (up and down) of share price should be more (or high) through out the day. In other words the fluctuation in share prices should be on high rate so that it will be easy for you to buy and sell on different prices. Suppose if share is moving up and down in very narrow range then on what price you will buy and sell? So it is always better if you choose shares which have high volatility in price movement.
Volume means trading quantities. The shares which you choose for day trading should have high volumes (or high traded quantity).
Why this is required?
The high volume indicates that there is more liquidity. Liquidity means lots of transactions had took place on this share and more people are interested to trade in this share. This will ease your trading job because you will get more exposure to the price to buy and sell at anytime. Due to high volumes there will be also high price fluctuations.
Points to remember for day trading
Following are very important points to be always remember by day traders.
Entry & exit points, stop loss limits, profit targets, your desired risk/reward profile,
amount of capital to be committed to trades, how long you need to hold the share if incase it is against your favor.
For more information go to Day trading techniques
Day trading rules for Indian share market
Itís important to do practice or paper trading before you starts actual trading. Following are the few reasons,
• Very importantly you will come to know how to place buy/sell orders, and will become familiar and perfect about using your trading system.
• You will gain confidence in yourself.
• The fear of trading will vanish. It is very important to keep fear away while doing day trading.
• You will become active to enter and exit the trade. Itís vital important that you must be pretty fast to enter and exit the trade (i.e.open positions).
Guide for daily profit in day trading
• Donít jump in trend early - Wait and get paper confirmation of trend change, and then plan and do your trades (buy/sell). Donít jump in or do early trades before any trade change confirmation this may damage your capital (bank balance).
• Donít wait in trade for long time - Suppose that you had done one trade (either buy or sell) but the scrip is not moving either up or down, it is just stable or moving with very low price difference, then you should get out of that trade and look for other scripís. You may encounter these type of situations when indices (NSE or BSE) and not moving (or moving with narrow range). At such time either you wait or come out of trade, donít loose patience and fall under loss.
• Donít change your trend on volume volatility - Some time you enter in trade by seeing the buy and sell quantities. For example, suppose you brought shares by seeing more buy quantity then sell quantity, expecting more buy quantity may push the share/stock up but after few minutes you see exactly reverse that you see more sell quantity and less buy quantity or both buy and sell high quantity or the difference of buying and selling quantity is decreased as compared to what you had seen before. So this point is very important, donít panic here and sell off your stock, wait and realize the situation properly and then take action. This situation comes many times but if you are sure that your share is going to move up then stick to it.
• Beware of companiesí acquisition or any announcement by Government - Suppose in the morning, before market begins, you should read or viewed the news of any Indian Company has acquired any foreign company (or part of foreign company) if you see this is actually best news/things that Indian company. But if acquisition amount is far more than expectation then this good news will turn into worst news. The shares of that company will start falling. So you should not get in trade and buy shares you have to wait and watch how market or other people are responding to these shares and once you understand then you can trade. So always watch where the market heading towards and then react.
Announcement of Government - You should also be very careful to decide your trade based on any government announcement.
For example, if government has declared any hike in interest rate then its good news for bank stocks and hence the shares will rise but if government has declared 2nd rate hike in very less span of time as company to first one (stay within duration of one, two month or three month) then this news will be worse for bank stocks, the share may keeping fall during the trading period. So realize and analyze the news and finally watch market behavior and this fall or do trade you will get success.
Resources to start your day trading in Indian share market
• Read financial newspaper like Business Standard, Economics Times, etc. If possible note down the high lights/breaking news with respective company names and keep close watch on them for that day.
• If possible watch share (stock) market related TV channels like Zee Business, CNBC, etc. In these TV channels you get over all idea/movements of all share prices and markets (BSE, NSE). And also it becomes easy to catch and keep close watch on related companies if any breaking news comes out during that day.
• Especially some share market related websites always displays current news, market affairs, share market trends, breaking news and various announcement done by company or government which may effect the share market and related companies. So try to access and have all ok on such types of websites before starting trading and also through out the day, if possible.
For latest market news, latest stock updates on day to day basis and also latest share market updates which may affect your shares, then please Go here
• So in short before starting you stock market trading you should be well aware of all the current news of financial market and if possible note down the breaking news or effective news and its related company and keep watch on that share and trade accordingly on that day.
Day traders secrets
Never invest all your money in same sector this method is called as diversification of shares.
This will protect your money from downtrends of any particular sector as you can make money from other sector.
There are various sectors like IT, Pharmacy, Banking, Steel, Petrol and Oil, construction and infrastructure, auto etc.
Day trading tips
Prepare your Trading Plan
Strictly maintain stop loss
Control your Emotions
Don't try to get big profits in single trade
Accept and Limit Losses
Check out volumes before buying
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