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A step by step guide to day trading

22 Jun 2023

Since the lockdown that was declared in March last year, India has seen a sudden explosion of newbies looking to enter the stock markets and make day trading their career. A powerful combination of smartphones, fast internet, technologically advanced trading apps and competitive trading plans are propelling an entire generation to discover the highs and lows of trading. Many are keen on learning basic intraday trading strategies.

Day trading is the practice of buying and selling stocks and squaring off one’s trades in a day. There are quite a few people who manage to make money by intraday trading but their path is not easy. Day trading demands an exacting discipline to educate oneself and a capacity to keep going on in the face of losses. However, its rewards are equally enticing and those who have mastered the art of day trading earn richly from the markets.

So, here’s a quick guide to intraday trading for beginners:

1. Knowledge of the markets

Day traders who do not study market movements and technical indicators often end up losing money in the markets. As a day trader, it is necessary for one to understand market sentiments as well as fundamental analysis of a stock. Arming oneself only with technical chart reading skills can turn out to be disastrous if one plays only on short-term news or information without considering the larger scenario. Additionally, one needs to have deep knowledge of derivative products before using them. Trading recklessly in derivatives can wipe out a good chunk of your savings.

2. Know your risk appetite

Day traders know their risk appetite very well and often limit their trades to a small part of their capital so that even in case a trade does go wrong, traders end up losing only a small fraction of their capital. On a better day, they can make up for the deficit and more, however, the key principle for them is to focus on preserving their capital than giving primacy to greed.

3. Day trading strategies

The markets are often volatile and confusing. Wading into the markets without working on your intraday trading basics is a sure-shot way to lose your money in the long run. Sure, a stroke of luck in the short run can make you some quick profit but such luck is bad for one’s trading acumen. Trading strategically while reading cues from the market is a better way to navigate the choppy waters of the stock markets. 

4. Choosing the right broker

  • Costs

Your profits are determined by the fees and commission rates that you pay to your broker. The lesser the fees and brokerage you pay, the greater your profit. 

  • Compliance

Make sure that your broker is reliable and reputable. Ensure that the broker complies with all the statutory and legal norms.

  • Support

No matter how advanced your trading app may be, one needs assistance or problem-solving help from their broker every now and then. Make sure that your broker has a responsive and cooperative customer care service.

  • Spreads

There is little scope for making money without receiving competitive spreads that boost your risk capacity. Find brokers that provide you with great spreads.

Final word

Day trading can be mastered with commitment, discipline and an unwavering focus on grooming one’s skillset. On such a demanding journey, one needs a reliable broker with a trading app that will give you the edge. With Motilal Oswal, you can buy shares online and trade seamlessly and smoothly on its app.

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