Intraday Trading Tips 2024: Basic Rules and Strategies for Beginners

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Intraday trading or day trading is the term used for share purchases and sales made on the same day. When a trader employs an intraday trading strategy, the trades do not result in any transfer of shares, and they settle all positions before the market closes. When a trader believes a stock will rise, they will buy low and sell high. On the other hand, a trader will typically short-sell, that is sell high and buy low, if they believe that a share will decline.

In this blog, we’ll share some intraday trading tips , strategies, and rules that will help you trade more confidently. It is important for beginners to note that intraday requires discipline, knowledge, and risk management to avoid potential losses.

Basic Rules of Intraday Trading  

The following guidelines for intraday trading will help you navigate the volatility of the stock market.

Trade During Designated Hours

In intraday trading, it is important to seize the appropriate momentum. The markets are open from 9:15 AM to 3:30 PM. However, there are specific moments during the session when markets gain strength. Prices are either very volatile or static the rest of the time. Such moments are preventable. The hours of 9:30 AM to 11 AM and 1 PM to 2:30 PM are generally considered suitable for intraday trading. However, optimal trading times can vary depending on the market conditions and individual strategies.

Have a Concrete Trading Setup

First and foremost, you need to be able to enter and exit trades for specific reasons with your setup. Never make a trade at random. Having the right setup will allow you to trade with assurance. Always pay attention to your setup’s trigger points and place buy and sell orders when necessary.

Increase Your Position Gradually

Start with a modest amount. As you become more assured of your setup, you’ll eventually be able to increase the position. Beginning with a larger position can lead to larger losses and a decrease in capital and confidence.

Trade in Stocks That Are Liquid

The shares must have liquidity to be bought and sold on the same day. This means that the share needs to have more active buyers and sellers. Alternatively, purchasing shares makes it more challenging to locate sellers of liquid shares at the desired price. As a result, you have to execute the sell order at a lower level and ultimately lose money.

Avoid Making Hope Trades

Having unrealistic expectations for the stock market is never ideal. Let’s see an example to better understand this rule. Assume that your setup produced a buy signal, and you purchased the shares at Rs. 550. Even though the price increased to Rs. 555, where your setup indicates a sell signal, you had set your target at Rs. 560. In response to the sell signal, you should close your position at Rs. 555 and not hold out hope that the price will rise to your target. In these kinds of situations, you usually wind up taking a stop loss. Try to avoid holding onto hope when trading intraday.

Finish Your Trades by 3:30 PM

In an attempt to reach their target price the following day, novice intraday traders frequently roll over their positions. But, there’s a good chance that the price will drop the following day as well, costing you additional money. Because of this, to become a profitable intraday trader, you must adhere to the rule and settle all trades by 3:30 PM, win or lose.

Keep an Eye on the Market

You must scan all the shares on your list of liquid stocks that you wish to trade to find any opportunities throughout the day. You need to compile one of these lists if you haven’t already. It helps you to maintain concentration and avoid feeling lost during the trading session. While there aren’t many working hours required for trading, you still actively monitor the market. This does not mean you have to be glued to your trading terminal all day, you can set up alerts and monitor remotely.

Significance of Target and Stop Loss

Target and stop loss in intraday trading are very important. Beginners are not likely to grasp the potential of making small wins consistently. You must never aim for huge returns in intraday trading because even a small percentage of gain gives a high return on investment in day trading.

Here’s an example to understand this.

Suppose you buy 200 shares of Company LMN at Rs. 100 per share. Since intraday trading has the benefit of margin, you will not have to pay the whole amount of Rs. 20,000 (Rs. 100 x 200 shares) for this trade. Let’s assume that Company LMN shares have a 5x margin. That means, you only need a capital of Rs. 4,000 (Rs. 20,000 ÷ 5) to enter into this trade.

Now, if you set a target of Rs. 104 and stop loss at Rs. 98, then, you have a chance of earning Rs. 800 (Rs. 4 x 200 shares) at risk of losing Rs. 400 (Rs. 2 x 200 shares).

Even with a small target of Rs. 4, you have a chance of earning 20% ROI (Rs. 800 ÷ Rs. 4,000). But you must also remember that the stop loss is very crucial. In this trade, if the price moves in the other direction, you could lose 10% (Rs. 400 ÷ Rs. 4,000) of your capital.

Therefore, setting a small target and small stop loss is important in intraday trading. Most experts make small profits consistently making the most out of high ROI. However, the risk factor of intraday trading should never be neglected. Here are some more strategies and tips that will help you further brush up your intraday skills.

5 Intraday Trading S trategies  

Technical Indicators

Intraday trading is mostly based on technical analysis. Using an indicator that suits your trading setup can improve accuracy and help you avoid entering into wrong trades.  

Small Time Frame Charts

The stock charts are available in various time frames starting from 1 minute and going up to 1 month where each candle represents the selected time frame. For intraday trading, you must stick to smaller time frames, from 1 minute to 15 minutes.

Multi-Time Frame Analysis

You can select shares based on a 1-day time frame the previous day and while trading, you can wait for trade confirmation on a small time frame chart. This helps you catch trades with high probability. With practice, you can analyse a share on multiple time frames with ease.

Avoid Trading in the First 15 Minutes

Trading during the first 15 minutes, from 9:15 AM to 9:30 AM, is mostly based on emotion. The news from the day before affects the market at first, and later on, the trend for the day begins to take shape. Therefore, it is advised to wait for 15 minutes before placing a trade.

Aim for a Higher RR Ratio  

RR ratio stands for risk-reward ratio. You must always define how much risk you can take to earn a certain reward. Ideally, if you plan to risk Re. 1 on a trade, you must aim to earn at least Rs. 2 to Rs. 3 from that trade. Needless to say, you must always aim to earn more at the least possible risk.

How Is Intraday Trading Different From Regular Trading?

Aspect	Intraday Trading	Regular Trading
Time Frame	Buy and sell within the same day	Buy and hold for the long term
Settlement	Positions squared off before the market closes. There is no ownership transfer	Shares transferred to the Premium Account after the purchase
Objective	Focused on short-term price movements	Focused on long-term price trends and company fundamentals
Trading Hours	Throughout open market hours	No specific time limitations
Risk Level	Higher risk level due to short-term price fluctuations	Lower risk, but still subject to market fluctuations

Conclusion

The idea behind intraday trading is to take smaller risks and make smaller wins. Even if only a tiny profit is made, the goal of day trading is to finish the day in the green. Leverage increases the return on investment in intraday trading, which is what draws many traders to it. Selecting the appropriate platform is just as important to your trading journey as adhering to these pointers and techniques. However, it is important to remember that intraday trading can be risky. Discipline, knowledge, monitoring of market conditions, and risk management are crucial.

If you are looking to start intraday trading, consider TradeSmart. Along with real-time support during market hours, we offer several educational resources to help you trade confidently. Our experts have more than 2 decades of experience in the stock markets of NSE and BSE . 

Open a free Premium Account today to start your trading journey!

Disclaimer: This article is for information purposes only and should not be considered as stock recommendation or advice to buy or sell shares of any company. Investing in the stock market can be risky. It is therefore advisable to research well or consult an investment advisor before investing in shares, derivatives or any other such financial instruments traded on the exchanges.