Winning Strategy: How to Play Intraday Trading

Prima facie intraday looks to be the easiest and the most rewarding way to earn quick bucks in stock market. But the fact is just opposite; most of traders lose money in intraday gambling as they fail to respond very prompt and quickly to market volatility. So to be a successful day trader you should follow certain rules. When you play any other game like cricket or chess you have to adhere to the assigned rule, similarly Intraday traders have to follow some common trading rules. If you won't follow basic rules then intraday becomes that game where profit of one day is wiped out another day. In present post I have tried my best to figure out some of the important intraday trading tips based on my own experience, hope this will help you all.

How to earn money in intraday trading : Sure Shot Winning Strategy

Step by Step Intraday winning strategy

1. Do not Mix the terms 'Trading' and 'Investment'!

Before you start intraday trading the first thing is to think again and to decide whether you are a trader or an investor. Intraday, trading and investment are three different things you should not mix them together. No matter all these involve buying and selling scrips; the strategies involved are quite different. See how it works;

• Investment = 90% fundamentals + 10% technicals.
• Trading = 90% technicals + 10% fundamentals.
• Intraday = 90% technicals + 8% psychology + 2% fundamentals.

It is clear here; traders take into consideration technical data, while investors look at fundamentals of the company. Don't try mix the two term. 

2. Check trading volume to ensure liquidity!

Day traders must ensure that they are trading in highly liquid stocks as they have to square off their positions in stock at the end of every trading session. This is not an issue when you are trading in large-cap as most of the large caps being index-based stocks, are traded with satisfactory volume. Most of the stock experts say no to mid-cap and small-cap shares because such stocks are traded with thin volume. But you can still trade in mid-cap and small-cap shares and even in penny stocks; all you need to do is just satisfy yourself with good trading volume of that shares. If stocks you are trading in is not liquid you could end up holding shares with no buyers at the end of trading session.

3. Fix entry and exit point before you make a position!

Fix your entry level and target price before you make any position as the mind of the trader changes after he makes a position in a scrip. This behavior sometimes affect his judgement which force him to sell too early or not to sell at all even if the scrip moves adversely. In this way he loses the opportunity to enjoy full upside gain. So, next time when you do intraday trading first set entry and target price. Once you have done it, adhere to it and let the stocks to hit either your target or stop loss. For keeping target and stop loss you may refer to my previous post which depicts in easiest way "when to Buy" and "when to Sell".

4. Square off your position at the end of trading session!

The next mistake by intraday traders is; when they are having loss in their position they hold the shares for next trading sessions and by doing so they are compelled to pay high brokerage for delivery of that stocks. Further, shares bought for very intraday/short-term horizon may not be of good fundamentals, hence it makes no sense to hold it. No matter you gained or lost you must square off your positions  at the end of every trading session.

5. Honour your Stop Loss!

Stop loss limits your losses if the price of the stocks goes against your expectations. In simple words it is a trigger point for buying & selling of scrips you are holding, Stop Loss is triggered when the stock moves beyond a specified price limit. Suppose you buy 50 shares of Infosys at Rs 1140 each and you set a selling stop loss of Rs 1120 if for any reason the share of Infosys falls below Rs 1120, your Stop loss will be triggered and a selling order will be sent to your broker; in this way, your losses will be minimized to the extent of Rs 20 per share even if the share drops to Rs 1100. 
Read more at Investopedea.com >>> 

• How does a stop-loss order work?
• What is trigger order?

6. Book profits when it meets target!

It goes without saying, intraday trading game is profitable only when it is done in a pre-planned way. The two psychological issues associated with intraday trading are 'Fear' and 'Greed', in order to cope up with 'Fear' and 'Greed' pre-determined target and stop loss is suggested to the trader. Make sure booking profit when your targets are met; by doing so you will never repent for profits to have been booked. 

7. Don't trade in  more than 3-4 scrips at a time!

It's imperative to diversify your portfolio if you are trading/investing in stock market. For an investor diversity up to 10-12 scrips is suggested but when it comes to a trader, limit yourself to just 3-4 stocks. However you may have up to 10 to 15 scrips in your watchlist which you track regularly. As a trader you need to track stock movements closely and continuously, so trading in more than 3 to 4 scrips at one go is not suggested to a day trader. 

8. Don't hesitate to research thoroughly!

A trader need to do more research work than that of an investor, do not hesitate to research thoroughly on stocks in your watchlist. Update yourself with all forthcoming news & events such as shareholding patterns, bonus issue, dividends, stock splits, result dates & analysis, mergers, credit rating, expert views etc. of the stocks. There are certain websites & mobile apps which provide their free services as to stock market where you can find high, low and closing price of stocks as well as their resistance and support levels. Some of the popular site are;

• Moneycontrol.com
• Investing.com
• Google.com/finance

9. Trend is friend: Don't fight with it!

As a trader you should not fight with market trends. Despite all technical factors the scrip you are trading in, may not trade as per your expectation if market does not support it. A stock might be bullish on chart but to trade accordingly it always need a favorable market trend, remember market spares no one. If market trend is not as per your calculations better to go with trends or not to trade that day. If you don't follow it is more likely you will end up with a losing session.

10. Small is beautiful!

While intraday trading can fetch a stupendous returns in a single trading session, it may also bring huge loss to a trader if target is not set rationally, Always go with small target to avoid losses. As an intraday trader you get an opportunity of leveraging your trade, you can earn handsome amount even if your scrips go up by 1% or 2%. As per 'Fear' and 'Greed' psychology there is higher chance of loss if you set a target higher than 3%. So, small is beautiful.

11. Learn some technicals!

As we have already seen how intraday trading is a game of 90% technicals, you should learn at least some basics of technical analysis. In most of the cases technical analysis does work. If it were all about fundamental, shares should have fluctuated only four times a year i.e. on its quarterly result day but why they fluctuate hundred times a day? There is number of books on 'Technical analysis' available online for free or at a very attractive price, take help from them.

12. Don't let your emotions control you!

For a trader emotional intelligence (EQ) is much more significance than one's intelligence (IQ). Emotions are like a watchman who filters out your decisions, trading is equally interlinked with human emotions. So you should manage your emotions and temperament to be a successful trader. It totally depends upon one’s psychological makeup; some people are patient while some are impatient similarly fearful, fearless, slow decision maker, prompt decision maker etc. selecting the best suited trading style would lead you to a sustained success not only in intraday trading but also in investing.

13. Don’t listen too much to experts or advisers!

No one can guarantee for 100% success in stock market; market spares on one. Better try to develop your own trading style rather than listening too much of experts or advisers on TV and websites. If you depend highly on experts opinion or any paid service you will ignore your own trading skills. Here you should L-E-A-R-N first and then remove 'L', in long run you will surely E-A-R-N. The only way to make money in stock market is hard work and self study, nothing can substitute self acquired knowledge & experience. One should listen to all but should apply own trading style. Everyone has to write his own paper in the exam of stock market. 

14. Keep your trading costs low!

Try keep your trading costs as low as possible. If you are paying high brokerage you will not be able to set small targets. When you open your demat account ask your broker regarding brokerage rate, you can also search online to ensure attractive brokerage plan. It's a simple economics funda; other things remaining same, the lower the cost is the higher profit will be. Most of the brokers provide flat fees of Rs. 20/- per trade which reduce almost 90% of brokerage costs.


Though I tried to explain all important aspects of day trading tips yet I believe there are thousands to be discussed, everyone has his own trading style depending on his experience. No matter what strategies you are applying the result should be in profit only. Please do share your ideas/suggestions on present post "How to Play Intraday Trading Game".

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