Here are a few key strategies that intraday traders can apply practically while trading. These tips are more generic in nature, whereas the strategies are more specific and fine-tuned. Here are 3 strategies that form the cornerstone of your trading strategy and therefore can help you in intraday trading…
Firstly ensure that you trade intraday with losses that you can afford to take. You don’t want to make a huge loss and then worry about how you are going to arrange the huge margin bill that your broker has sent to you. Remember, not all risks are directly evident and some risks could be hidden. For example, the risk of illiquidity is a hidden risk.
Avoid the temptation to overtrade in the market. We all like to look macho. I mean if I lost Rs.100 in a short trade then I will recover Rs.200 in a long trade. That kind of bravado will not get you too far. There are days when you will not be able to grasp the gist of the market. On such days, it is quite common to overtrade to recover the losses. That can only worsen matters. As a matter of strategy, never overtrade in intraday trading.
Do your homework as an intraday trader. You may be surprised but intraday trading needs a lot of diligent planning and homework. You may not worry about intrinsic value and P/E ratios but news flows and announcements are an integral part of your intraday trading activity. Intraday trading is quite multi-faceted and it includes the impact of fundamentals, technical charts, F&O data, and news flows. Your strategy must include close monitoring and analysis of all these trends to have a meaningful experience. Like it or not; intraday trading will need you to double up as a smart analyst too.