| What is day trading and its advantages? | | | | you starts actual trading. Following are the few |
| Day trading-Buying and selling of shares on daily basis | | | | reasons, 1) Very importantly you will come to know |
| is called day trading this is also called as Intra day | | | | how to place buy/sell orders, and will become familiar |
| trading. Whatever you buy today you have to sell it | | | | and perfect about using your trading system. 2) You |
| today OR whatever you sell today you have to buy | | | | will gain confidence in yourself. 3) The fear of trading |
| it today and very importantly during market hours | | | | will vanish. It is very important to keep fear away |
| that is 9.55 am to 3.30 pm (Indian time). | | | | while doing day trading. 4) You will become active to |
| Advantages of Day Trading -a) Margin trading - In | | | | enter and exit the trade. It's vital important that you |
| Day trading you get margin on your balance amount | | | | must be pretty fast to enter and exit the trade (i.e. |
| means you get more leverages (amount) on your | | | | open positions). |
| available balance amount to do day trading this | | | | What are the common day trading mistakes and |
| concept is called margin trading. Margin trading is only | | | | how to avoid them to make generous profit |
| possible in day trading and not in delivery trading. | | | | 1) Don't jump in trend early - Wait and get paper |
| How much extra amount (margin) you are going to | | | | confirmation of trend change, and then plan and do |
| get that totally depends on your broker, or your | | | | your trades (buy/sell). Don't jump in or do early |
| online system brokers. Some broker provides 3, 4, 5, | | | | trades before any trade change confirmation this |
| and 6 times extra margin. If you do margin then you | | | | may damage your capital (bank balance). |
| have to square off your open trades on the same | | | | 2) Don't wait in trade for long time - Suppose that |
| day (means if you bought shares then you have to | | | | you had done one trade (either buy or sell) but the |
| sell and if you sold shares then you have to | | | | scrip is not moving either up or down, it is just stable |
| buy)before market time (that is 3:30 PM) finishes.b) | | | | or moving with very low price difference, then you |
| Second important advantage is that you have to pay | | | | should get out of that trade and look for other |
| is less brokerage (commissions) on day trading | | | | scrip's. You may encounter these type of situations |
| (Intraday) as compared to delivery trading. This | | | | when indices (NSE or BSE) and not moving (or |
| brokerage again depends from broker to broker (or | | | | moving with narrow range). At such time either you |
| on your online trading system). c) In day trading you | | | | wait or come out of trade, don't loose patience and |
| can sell and then buy this is called short sell which you | | | | fall under loss. |
| cant do in delivery trading. You can sell shares when | | | | 3) Don't change your trend on volume volatility - |
| prices are falling and then buy when price falls further. | | | | Some time you enter in trade by seeing the buy and |
| Disadvantage of Day Tradinga) As you are benefited | | | | sell quantities. For example, suppose you brought |
| to get more extra amount to trade (that is margin | | | | shares by seeing more buy quantity then sell |
| trading) and get more extra profit it is also equally | | | | quantity, expecting more buy quantity may push the |
| true that you are also taking more risk of loss.b) At | | | | share/stock up but after few minutes you see |
| any cost you have to square off the open | | | | exactly reverse that you see more sell quantity and |
| transaction before 3:30 PM (especially if you are doing | | | | less buy quantity or both buy and sell high quantity or |
| margin trading) at that time the price may not be in | | | | the difference of buying and selling quantity is |
| your favor. | | | | decreased as compared to what you had seen |
| Basic Requirements for Day trading | | | | before. So this point is very important, don't panic |
| A successful day trader or share market trading | | | | here and sell off your stock, wait and realize the |
| requires couple of disciplines and following | | | | situation properly and then take action. This situation |
| requirements - | | | | comes many times but if you are sure that your |
| 1) PC with internet - If you need to do it yourself | | | | share is going to move up then stick to it. |
| then you need to have a PC or else you can do it in | | | | 4) Beware of companies' acquisition or any |
| internet café also. A PC with good internet | | | | announcement by Government - Suppose in the |
| connection speed. The internet connection should not | | | | morning, before market begins, you should read or |
| be slow or should not face any other problem | | | | viewed the news of any Indian Company has |
| especially in Day Trading. | | | | acquired any foreign company (or part of foreign |
| 2) Online Account (Demat Account) - You need to | | | | company) if you see this is actually best news/things |
| open online share trading account with any of the | | | | that Indian company. But if acquisition amount is far |
| available banks or online brokers.Points to remember | | | | more than expectation then this good news will turn |
| while opening online accounta) Make multiple enquiries | | | | into worst news. The shares of that company will |
| and try get low brokerage trading and demat | | | | start falling. So you should not get in trade and buy |
| account.b) Also discuss about the margin they | | | | shares you have to wait and watch how market or |
| provide for day trading. c) Discuss about fund | | | | other people are responding to these shares and |
| transfer. The fund transfer should be reliable and | | | | once you understand then you can trade. So always |
| easy. Fund transfer from your bank account to | | | | watch where the market heading towards and then |
| account and visa versa. Some online share accounts | | | | react. Announcement of Government - You should |
| have integrated savings account which makes easy | | | | also be very careful to decide your tarde based on |
| for you to transfer funds from your saving account | | | | any government announcement.For example, if |
| to trading account.d) Very important is about service | | | | government has declared any hike in interest rate |
| they provide, the research calls, intraday or daily tips. | | | | then its good news for bank stocks and hence the |
| e) Also enquire about their services charges and any | | | | shares will rise but if government has declared 2nd |
| other hidden charges if any. f) And also see how | | | | rate hike in very less span of time as company to |
| reliable and easy is to contact them in case if any | | | | first one ( stay within duration of one, two month or |
| emergency. Emergency closing or squaring off trades | | | | three month) then this news will be worse for bank |
| in case of any technical or other problems | | | | stocks, the share may keeping fall during the trading |
| How to choose shares (stocks) for day trading | | | | period. So realize and analyze the news and finally |
| In day trading, traders mostly wish to do buying and | | | | watch market behavior and this fall or do trade you |
| selling on small profits or else they look for | | | | will get success. |
| overbought or oversold shares. Taking into | | | | Things to study in the morning before starting your |
| consideration these important points following basic | | | | day trading or share market trading or Intraday |
| things you should look in for shares while choosing | | | | trading? |
| them for day trading.- Price Volatility- Volume | | | | 1) Read financial newspaper like Business Standard, |
| (quantity)What exactly these terms mean and how | | | | Economics Times, etc. If possible note done the high |
| to use them while Day Trading. | | | | lights/breaking news with respective company names |
| Price Volatility - The Price volatility means the | | | | and keep close watch on them for that day. |
| movement (up and down) of share price should be | | | | 2) If possible watch share (stock) market related TV |
| more (or high) through out the day. In other words | | | | channels like Zee Business, CNBC, etc. In these TV |
| the fluctuation in share prices should be on high rate | | | | channels you get over all idea/movements of all |
| so that it will be easy for you to buy and sell on | | | | share prices and markets (BSE, NSE). And also it |
| different prices. Suppose if share is moving up and | | | | becomes easy to catch and keep close watch on |
| down in very narrow range then on what price you | | | | related companies if any breaking news comes out |
| will buy and sell? So it is always better if you choose | | | | during that day. |
| shares which have high volatility in price | | | | 3) Especially some share market related websites like |
| movement.Do you want to know how to find out | | | | capitalmarket.com, always displays current news, |
| the high volatility shares then please click here? | | | | market affairs, share market trends, breaking news |
| Volume (quantity) - Volume means trading quantities. | | | | and various announcement done by company or |
| The shares which you choose for day trading should | | | | government which may effect the share market and |
| have high volumes (or high traded quantity).Why this | | | | related companies. So try to access and have all ok |
| is required?The high volume indicates that there is | | | | on such types of websites before starting trading |
| more liquidity. Liquidity means lots of transactions had | | | | and also through out the day, if possible. |
| took place on this share and more people are | | | | 4) So in short before starting you stock market |
| interested to trade in this share. This will ease your | | | | trading you should be well aware of all the current |
| trading job because you will get more exposure to | | | | news of financial market and if possible note down |
| the price to buy and sell at anytime. Due to high | | | | the breaking news or effective news and its related |
| volumes there will be also high price fluctuations. | | | | company and keep watch on that share and trade |
| Points to remember for day tradingFollowing are very | | | | accordingly on that day. |
| important points to be always remember by day | | | | Important principles to be follow by day tradersNever |
| traders.Entry & exit points, stop loss limits, profit | | | | invest all your money in same sector this method is |
| targets, your desired risk/reward profile,amount of | | | | called as diversification of shares. This will protect |
| capital to be committed to trades, how long you | | | | your money from downtrends of any particular |
| need to hold the share if incase it is against your | | | | sector as you can make money from other |
| favor. | | | | sector.There are various sectors like IT, Pharmacy, |
| Why it is required to practice day trading before | | | | Banking, Steel, Petrol and Oil, construction and |
| starting actual day trading? | | | | infrastructure, auto etc. |
| It's important to do practice or paper trading before | | | | |