Your stock selection makes a lot of difference. If you focus too much on volatile stocks then your stop losses are likely to get triggered too often. Then it is going to be hard for you to make money on intraday trading. If you select stocks that are unpredictable, then even your best of analysis will not work. They are just too volatile for your comfort. Your stock selection should be based on clear-cut criteria with a focus on well-defined charts and trading levels. Patterns matter a lot in intraday trading.
The second aspect of profiting in intraday trading is to identify the proper levels of entry and exit. The bet is supports or resistances you must hone your skills here. This requires the proper use of supports, resistances, breakouts, and turnarounds. The key to being profitable in intraday trading is to time your entry and exit as close to these critical levels as possible.
Tweak your risk-reward ratio based on market conditions. In simple terms, this is the ratio of the stop loss gap to the profit gap. A minimum ratio of 2.5:1 is required to be profitable. However, in trending markets, you can be more aggressive in setting this ratio higher. The whole idea of intraday trading is to make the best of the favorable scenario.
This is the cardinal rule and also the most important rule. Always trade on the side of momentum! You are not a gold digger or a value investor. You are a trend trader and not a value investor. Don’t try to outsmart the market because the market is smarter than individual traders. Identify the underlying momentum of the market and the stock and position your trades accordingly. For intraday traders, a trend is your friend!
Learn when to buy, when to sell and when to do nothing. At times, the most profitable trade is when you sit out of the market. You will realize that when you give volatile markets a miss. You will realize that even better when you plunge into volatile markets. This is true when the market is very confusing and trying to dip into the market is likely to backfire. When you sit out of the market, you are able to get a better perspective and look at the markets in a more objective manner. This really works, especially in intraday trading.