Day trading is a lucrative opportunity in the share market to earn substantial profits. However, it is a major challenge for those lacking sufficient knowledge and understanding. At one point in time professional day, traders only worked for trading houses, financial organizations, and brokerages. With the emergence of online trading platforms, it is now easier for investors to start day trading.
Day trading refers to the act of buying and selling stocks within a day or multiple times in a day. Traders try to make the most out of small price deviations to earn profits. There are huge scopes of making money if one sticks to the proper strategies of day trading. However, it can prove to be dangerous for beginners if they do not have a well-thought-out plan.
One cannot simply rely on traders for high-volume purchases. There are a handful of brokers who specialize in day trading. In the beginning, it is always best to seek some guidance from professional’s minds. The following section of this article talks about some of the general principles of how to start share trading in India for beginners. You will get to know about basic charts and patterns, trading strategies, and ways of limiting losses.
Basics concepts of day trading
Day trading typically involves buying and selling financial tools within a single day. The transaction can take place in any marketplace like a stock market or foreign exchange. One must have sufficient knowledge and funds to become a successful day trader. Professionals rely on higher amounts of leverage and short-term trading plans to take advantage of small price fluctuations.
One of the most popular practices of day trading is trading based on news. Always keep track of schedule announcements like corporate earnings, economics statistics, and fluctuations in interest rates, market psychology, and market performance. Following are some of the most essential day trading strategies. It will help you learn how to start share trading in India for beginners.
- Start small
If you are a beginner never focus upon more than 2 stocks in a session. You will find that tracking and understanding the fluctuations is easier with fewer stocks. Currently, fractional share trading is gaining popularity. Where you can specifically invest or sell in smaller portions of holdings. It is an important strategy for learning how to start trading in stock market.
- Knowledge Is Power
Besides the knowledge of basic trading methods, day traders also need to keep an eye on the latest stock market news. These events make a significant impact on the economic outlook and interest rates.
You should always prepare well before day trading. Always create a list of stocks that you wish to trade and select companies accordingly. Keep a tab on the latest business news and frequently visit reputed financial websites.
- Have Adequate Funds
It gives a clear assessment of the amount of capital one wishes to risk in every trade. Typically a successful day trader would risk 1 to 2% of their account value in each trade. Remember to set aside a sufficient amount of funds for trading. Always be prepared to lose as it can happen at any moment.
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- Keep Away From Penny Stocks
When looking for low prices and best deals chances are you get attracted to purchase penny stocks. In most cases, these shares are illiquid and chances of making a profit are a minimum. Hence it is best to keep away from penny stocks unless you find a real opportunity.
- Wait For the Right Time
Purchase orders placed by traders and investors are transacted as soon as the market opens in the morning. It gives rise to price volatility. Experience day traders are always able to recognize certain patterns and pick their shares accordingly. This approach helps them earn maximum profits even there is a slight price fluctuation. For beginners, it is best to study the market in the initial 15-20 minutes. The middle hours of trading are less volatile and movements speed up at the closing hours. Rush hours bring opportunities but as a beginner, it is best to avoid them initially.
- Always Take a Realistic Approach
You need to understand that all your strategies will not bring profit. Even seasoned traders have a success rate of around 50-60%. However, they make more money through their wins than they lose.
- Stay Calm
You will come across situations when the stock market will get on your nerves. To start your journey as a day trader you need to keep control over fear, greed, and hope. Always take logical decisions and never get carried away by emotions.
- Always Stick To Your Plan
Every time develops trading strategies in advance. This is one of the key tricks of successful traders. Follow your strategies carefully rather than chasing profits. Never let your emotions take over your strategies.
Challenges of Day Trading
To start your journey in day trading you need to have a lot of knowledge and practice. Multiple factors make day trading a daunting task. At first, learn how to go up against seasoned traders. These people employ the best technology and connections in the market. Even if they lose, their setup will help them to succeed at the end of the day.
For individual investors psychological and emotional biases are natural. Online share trading in India for beginners requires sufficient skill and knowledge to succeed.
Technical Analysis and Patterns
Nothing can substitute the use of in-depth technical analysis, charts, and patterns. These tools will help you get a clear understanding of day trading. You will be able to understand the volatility of a specific share and how to invest in the stock market in India.
Earn a Living from Day Trading
If you have read this article till here then you are most likely to start a day trading career. To become a professional trader with a livable salary you need to have specialized tools and equipment. You'll also require disciplined trading techniques and have sufficient patience. Making a living through day trading in the Indian stock market is largely dependent on your commitment, discipline, and strategies. If you are sincere about your efforts then you will surely succeed.
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