Most traders who are starting out wonder: Is intraday trading profitable? Well, it is like any business. Thorough research, hard work, and the right guidance from the right expert can help build your intraday trading profit.
Everybody has a certain amount of trading capital to start with. For intraday trading, the rule of thumb is to use no more than 2% of your trading capital for a single trade. Instead spread your capital and, thereby, your risk, across multiple trades.
Read more: How to be a successful day trader
A stop loss is an automated order that lets a trader sell or buy a stock when it touches a set price. It stops the trader from being overwhelmed under multiple open trading options. It also wards off severe loss. When you are buying stock, a stop loss order should have a trigger price set just below the latest price bar low. Even if the price plunges below it, you will be able to exit without incurring a huge loss. When you are short selling, the stop loss order should have a trigger price just above the recent price bar high.
Think of a trade with a short time frame of five minutes, 15 minutes, or three hours. Right after the market opens, there is a period of volatility. If you study it closely, you can gauge the possible highs and lows of the day. Prices may break out of this range, based on which traders set an entry point.
Read more: Intraday trading formula
Any market operates on the usual laws of demand and supply. When there is huge supply and very little demand, the prices drop. When there is huge demand and little supply, the prices soar. Look out for the imbalance between demand and supply to make a profitable trade.
Don’t gamble with your wealth. As a rule, the acceptable risk-to-reward ratio is 3:1. Keep to this rule so that you do not get carried away and incur huge losses.
The relative strength index (RSI) is a measure of losses and gains within a set timeframe. The average directional index (ADX) reflects the sharp changes in price trends. You need to take both into account when you do intraday trading. For instance, people are advised to sell when the RSI crosses the upper limit. The movement of the market, when tracked with smart research, gives you a trading strategy that is optimal.
Read more: Intraday trading rules
If you’re treading the waters of intraday trading, why not sign up with Kotak Securities? All you need is to open a trading account with Kotak Securities. With their Trade Free Plan, you get to enjoy several benefits:
To sum up, intraday trading is a source of income for those with a steady hand. It is all about building small profits through many trades throughout the day, rather than a huge profit in one go. Make a realistic assessment of the market and its risks. You should be able to turn this into a steady source of income.
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