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How to do Day Trading in India? Tips to become a successful Day trader

Updated on August 7, 2017

Intraday trading strategy in Stock market

What is Day trading?

Day Trading is the buying and selling of securities within a single day. It is also called Intraday Trading. The idea of Day Trading is to make big profit margins by using the small price movements of securities within a single day. This is called “Leverage” or “Margin”. Day Trading is most common in the stock market and Forex (foreign exchange) market. Generally, one needs to invest a higher amount of money in Day Trading in order to reap big returns, when compared to normal stock trading. In normal stock trading, people will buy stocks when the price of stock is low and sell stocks when the price is high. The same mechanism applies for Day Trading except that the stocks are bought and sold within a single day. Day Trading is riskier when compared to inter-day stock trading. You must invest only your risk capital in Day Trading.

People generally perceive day trading to be highly risky as well as incredibly profitable. Neither is true. People who enter day trading without proper experience and knowledge of the market often end up losing money. But with proper market knowledge, it’s a worthwhile activity. Also, one must never invest money in Day Trading which they cannot afford to lose. Day Trading definitely carries its risk and even if you have two consecutive good days, you may have two bad days where you could lose money. Success lies in how you manage to reduce risk and continue making profit. Patience and discipline are most important for a Day Trader.

Individual Traders: They often trade using their own money or use other people’s money to invest in Day Trading. They receive a certain percentage of profit as commission.

Brokers: These people have access to a large amount of capital, possess trading experts and costly analytical software. They make the maximum out of the fluctuations in the market within a given day. Often, Brokers will receive a certain sum of money from investors and pool them into Day Trading. They will pay a certain part of the overall profit as interest to the investors each month. However, most of the profit will go to the broker as he is the one deploying all resources into the activity.


Things needed for Day Trading

Day trading does not require any big capital investment. The below are all you need to start Day trading

PC with internet: To do Day Trading, you need a PC with a good-speed internet connection.

Demat account: A Demat account required for normal stock trading is enough for Day trading also. You could open this through any online broker

News Sources: Knowledge is strength. You need frequent updates on the industry and market situation so that you can capitalize on the opportunities as quick as possible.

Analytical Software: Analytical Software provides you with instant updates on behavior of the market and stock prices. These soft wares capture technical indicators and swing patterns like Elliott Wave patterns to predict which stocks are worth investing for the day. These are preferred by people who don’t have time to analyse news. There are many Day Trading Apps available on the market. NSE live chart app is an example of a Trading App. Zerodha Pi, Motilal Oswal, Sharekhan Tiger, ICICIDirect Trade Racer, Angel SpeedPro are examples of popular mobile trading Apps

Trading platform: There are many online trading platforms offering their services. ShareKhan is a leading broking house in India. There are other online sites like Moneycontrol, ICICIdirect etc


How to select stocks for Day trading in 1 Minute courtesy:youtube

How to Start Day Trading?

Now assuming that you have opened a Demat account and acquired the above basic resources, let’s see how to start Day Trading.

You need to track a stock and watch its price movements. There are different points like Open, high and close. High is the point at which a stock reaches its highest price in a day. By studying these movements, you will know when to buy a stock i.e, Buy the stock when it’s at Low and sell it when it’s at high. The bottomline in Day Trading is that you must get a better idea of Tomorrow’s Day Trading for the particular stock that you are tracking. Also study the supply and demand of a stock. The simple logic is that price will go up when the demand is high and Supply is low. If you study all the above factors, you will improve day by day

Working hours of the market is 9:55 am to 3:30 pm (IST)


Top Indian stocks for Day Trading

Important Tips for Day Trading


1. Choose highly liquid shares: Choose shares that get traded in large volumes every day. Typically, large-cap, index based stocks are highly liquid. Don’t choose mid-cap and small-cap shares. Else you will end up holding shares that no one will buy at the end of the day.


2. Fix your entry price and Target: Before you start buying, fix your entry price and target level. Generally, the mindset of the trader changes and he may sometimes sell too quickly before the stock reaches a higher price. This will reduce the profit.


3. Use Stop losses: It’s a provision for reducing risk. A Stop loss is a point for selling shares after they have moved beyond a specified level. For example, if you buy 50 shares for Rs 800 each and set the Stop loss at Rs 775, your shares will be sold if the price falls to Rs 780. This way you can minimize loss


4. Book profits immediately when targets are met. At the same time, if you feel there is chance of price crossing the Target level, raise the Stop loss accordingly. Suppose you have set a target level of Rs 150 and the stop loss at Rs 120. If you feel that the stock may reach a price of Rs 165, then you could raise the stop loss to Rs 140


5. Don’t fight with the market: Sometimes the market may decline despite all technical factors being bullish. In such cases, you need to be patient. There is always a Tomorrow. Remember that and be patient. Even if you incur a loss of Rs 10 for two days, you may obtain a profit of Rs 30 the third day

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