Basics of Investing in Intraday Trading - Upstox (2024)

When we talk intraday trading, we just have trading in mind that lasts for a single day. But, we don’t know the details about intraday trading. Here in this article, we will get into the details of intraday trading and address doubts such as

• What is Intraday Trading
• Intraday Trading Indicators
• Delivery in Intraday Trading
• Things to Keep in Mind in Intraday Trading

What is Intraday Trading?

Intraday trading is basically buying and selling of stocks on the same day. If you are doing day trading in a stock, your intention is clearly not to invest in that stock. The main purpose of intraday trading is to earn profit on the short term by harnessing the movement of stock indices.

You will be needing an online account to conduct intraday trading. While conducting intraday trading, you will have to notify that the orders are specific to intraday trading.

Intraday Trading Indicators

Intraday trading indicators are favorable tools used to maximize your returns. Some important intraday trading indicators are:

• Moving Averages: Moving averages is the most commonly and widely used indicator. It is the line on the stock chart which connects the average closing rates over a given period. If you are considering a longer period, the moving average will be more well grounded. Moving averages let you comprehend underlying movement of price as most of the times price of a stock doesn’t move only in one direction.
• Bollinger Bands: The concept of Bollinger bands is a bit more advanced than that of moving averages. It comprises 3 lines - the moving average, an upper limit and a lower limit. With all these, you can comprehend underlying movement of the stocks better than just by moving averages. It will provide you a better understanding of the stock’s trading range.
• Momentum Oscillators: Sometimes stock prices move unrelated to the bullish or bearish market trends. In such cases, it will be easy for you to comprehend the movement of the stock if you follow momentum oscillator. This indicator is depicted within a range of 0 to 100 and will be advantageous for you when the price has achieved a new high or low. You can predict if the stock will further rise or fall.
• Relative Strength Index (RSI): The RSI is one of the most useful intraday trading tips which helps you determine shares’ gains and losses. It is calculated in index form which narrows down the RSI score ranging between 0 to 100. The index increases when the price of the stock rises and vice versa. You are recommended to sell the stock when the RSI touches 70 and buy when it falls to 30.

Delivery Intraday Trading

Delivery intraday trading is slightly different from general intraday trading. If you want to participate in intraday trading, your money is more secured with delivery intraday trading. In delivery intraday trading, you buy shares and sell it after one day. The main advantage of delivery intraday trading is that it is much more secure than regular intraday trading. You are not obliged to sell the stocks at the end of the day. You can take delivery for an undefined period of time and not sell them on the same day with a loss.

Things to keep in mind while trading intraday

• Choose Liquid Shares: You should always choose liquid shares (or shares with high volume trade) for intraday trading, as you will have to sell these shares before the end of the day. It is recommended that you choose two or three large-cap shares that are highly liquid. Trading in Mid-cap and small-cap shares can oblige you to hold these shares because of low trading volumes.
• Determine Entry and Target Prices: It is highly recommended that you determine your entry level and target price. If you fail to do so, you may lose the opportunity to take full advantage of the intraday market by selling your stock before it reaches a higher price.
• Utilizing stop Loss for lower impact: Stop loss is used to automatically sell the shares if the price falls below a certain limit. You should determine the stop loss to limit your potential loss due to fall in stock prices. It can save you a lot of money and it is highly recommended that you determine stop loss before trading intraday.
• Book Your profits when target is reached:
  Don’t try to be greedy during intraday trading. You should sell your stocks when the target price is achieved. In case you think that the stock has further possibility of rising, you can readjust the target price.
• Research your wish list thoroughly:
  You are advised to include more than 5 shares in your wishlist and research them thoroughly by evaluating corporate events such as mergers, bonus dates, stock splits, dividend payments, etc. After you are confident about the stock you have selected, you can trade in it intraday.
• Don’t move against the market:
  Never move against the market until and unless you are confident about it. It is very tough to predict the market. If the market moves opposite of what you expected, you should exit as soon as possible.