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Intraday trading needs subject expertise

Intraday trading needs subject expertise
Highlights

In intraday trading a trader buys and sells stocks or commodities on the same day.

In intraday trading a trader buys and sells stocks or commodities on the same day. In this trading, time is limited from 9 am – 3.30 pm. Profit or loss is booked on the same day.

For intraday trading fundamental analysis is not required. Price reacts purely to external conditions and trades can be easily identified. For example, when budget was presented few weeks back, market reacted very strongly and there was a continuous steep fall in the overall market condition because the budget was not in favour of investors.

Sometimes returns are higher than expected. Most of the brokers offer a high leverage which enables a trader to take more number of shares. One has to follow the market a day before entering. Previous days analysis is enough to enter into intraday trading.

In intraday trading the risk reward ratio is high. Pre-market open trading time is between 9 to 9.15. The analysis of data during this time enables a trader to pick up his stocks.

Intraday cushions the risks involved in gap down openings. Having seen the pros let's have a glance at the cons for intraday trading. Trend identification is a major challenge. There is too much noise at times which confuses the trader.

News keeps pouring in from channels related to share market and from certain apps. One gets calls from the broker which might be quite contradictory from the news which comes on a TV channel. Sometimes it is better to stay away from noise and focus on the price action.

Every expert has a different view on stock market analysis. Technical indicators might not work in live market for intraday trading. Till the time a trader can build his own strategies he can follow any one person who is doing good in the market. These days there are several Youtubers who give calls for the next day and who also upload their profit and loss statements.

In intraday trading sometimes the price rises beyond expectation and similarly falls also. In intraday there could be a price variation of Rs 20 to Rs 50 upward or downward. That would amount to a huge profit or loss. Too much of greed may give loss.

Sometimes too much of leverage offered by the brokers is harmful. In commodity trading specially like crude oil the leverage offered by them is high, but the risk potential is also equally high.

Several price patterns like head and shoulder, cup and handle may not work at times especially in intraday. Thus, intraday calls for expertise in the subject and one needs to exercise trades judiciously.

(The author is a homemaker who dabbles in stock market investments in free time)

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