The Intraday Trader

The-intraday-trader. A beginners guide.


The Intraday Trader – A beginner’s Guide to Success.

This is one of the riskiest trading styles. To succeed consistently, the Intraday trader needs to stay focused, be calm, and be at peace every day during the market hours. One moment of panic or greed takes all the efforts away. Intraday trading should be undertaken only when one can put all of his/her daytime in the markets. I would also suggest intraday traders to trade only on the days when they are in a positive state of mind.

The definition of an Intraday Trader: A person who opens and closes a position in the market index or a security in the same trading day. Intraday Traders mostly play on futures and options as one can earn the most, with the least amount of money put in. They capitalize on small moves in the value of an index or a  security. These traders mostly employ technical analysis to determine the conditions for entering and exiting a trade with profit. Intraday Traders carry the potential to earn an extraordinary ROI (Return on Investments) every day, but they come under the high-risk ‘willing’ traders.

Usually, the Intraday Traders require to dedicate themselves to continuous monitoring of multiple screens of data in order to determine the most favorable market conditions and times to enter and exit trades. Some intra-day traders also develop automated systems based on technical analysis and then let the computer do its job.

Most of the people who take to Intraday Trading, start losing money because of the high volatility in the markets and move out after their beginner’s luck tapers off.

If you intend to start to be an Intraday Trader, here are some rules you must follow, to be successful :

  • First of all, fix an investment strategy (i.e. the entry-exit points, the algorithm used, the amount of money to be traded, the stop loss and the profit percentages) and stick to it no matter what.
  • Make sure you are present until the time the market is open. If you have to move out for a bit during market hours, it is best to close your open positions before you move out.
  • Start Investing small amounts which won’t pinch you even if you lose for the few days.
  • Target only a certain number of trades a day. If the market is highly volatile, there’s a possibility that you may have to put in many trades per day and lose a lot of money. Avoid that by deciding the max number of trades per day. Generally speaking, the Intraday traders get into 5-10 trades per day at the most.
  • Always choose Futures and Options of ‘Market Index’ or ‘highly liquid stocks’.
  • It is prudent to book the profits or exit an open position as soon as a market reversal is seen. Maintain strict stop losses to contain impact (both financial and emotional). Also, make sure you book profits as soon as your estimated target is achieved. Don’t let panic or greed take over.
  • Go with the market trend. Don’t try and fight the trend.
  • Before the day end, make sure that you quit all your open positions. As the Intraday Traders’ outlook is very-short-term, it is best to move out of all open positions before the end of the day.
  • Study the market data every day to pick up appropriate stocks for the next day’s intraday trading. Spend time on your selection.
  • Select only a few stocks for intraday trades, so that you can keep a tab on each and every one of them without hassles or confusion.
  • Trade only when you are in a positive frame of mind as the possibility of minting profits is more in such a frame of mind.
  • Keep a backup computer/mobile and an internet connection to face a minimum downtime while trading.

Intraday trading, if not handled properly, can have drastic results on the traders’ finances. Take utmost care. It is not easy to put the human temptation (of earning huge profits) aside for anyone but it is definitely possible to be a profitable intraday trader if one follows all the above-mentioned rules with practice and consistency. Remember, earning profits in intraday trading is not about predicting the market trend OR timing the markets accurately. It is all about practice and discipline.

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