Intraday Trading Tips for First-Time Investors: How to Open a Trading Account
Intraday trading involves buying and selling financial instruments on the same trading day. In comparison to waiting for days, weeks, or even months for a lower stock purchase price or a higher selling price, an intraday trader performs internal trading on the same day. They focus on short-term price movements. Therefore, for beginners in the concept, starting with intraday trading will help them understand basic information and prepare for setting up the initial trading account.
What is Intraday Trading?
Traders define intraday trading strategy as trading on market volatility and price fluctuations within a trading session. Traders do this to profit from rises and exceptionally quick falls of stock prices, currencies, or derivatives within a single day; traders must end intraday transactions before market closing, as they do not carry positions to the next day.
Why a Trading Account Is Necessary?
Anyone who intends to trade intraday must open a trading account with a registered broker. By definition, a trading account serves as a platform through which investors buy and sell securities in the market. It allows a demat account (where stocks are held in an electronic format) and links to a bank account for funds transfer.
How to Open a Trading Account?
Choose a Broker: Select your broker registered with the necessary agency, such as SEBI (Securities and Exchange Board of India), if you trade in the Indian market. Assign weights to brokerage, user-friendliness of the trading platform, customer care, and intraday trading features.
Fill out the Application: Brokers provide online forms through their sites. The application will ask you for certain details like name and address and PAN (in India) and bank details.
Submit KYC Documents: Upload identity and address proofs, Aadhaar, and PAN for KYC. Complete all KYC requirements.
Verification: Brokers conduct verification online or over the phone. Some may require a video KYC to confirm your identity.
Bank Linking: To facilitate smooth transactions between your finances and the broker’s trading platform, link a bank account to the trading system.
Get Login Credentials: You will generate an ID and password to log in and access the platform for trading.
Download the Trading App or Use the Web Platform: Brokers provide intraday trading features like charting tools, market depth, and alarms in addition to web-based platforms and mobile applications.
Intraday Trading Tips for Beginners
1. Start Small
It is wise to start with a small amount. Every change in the market will likely make nearly every deal a loss. With smaller capital, exposure to learning correctly can decrease.
2. Select Liquid Stocks
Target only high-volume stocks. These stocks represent the type for intraday trading. As stocks become available to buy and sell, traders encounter difficulties in intraday trading without great movement or volume; some stocks can leave traders stuck in a position.
3. Use Stop Loss Orders
Always use stop-loss orders to enhance risk management. A stop-loss is a limit you set as the price at which your position will automatically sell without your involvement. This preserves capital and avoids emotional decision-making.
4. Trend-Following Market
Increased chances of success arise from trading in the direction of market trends. Assess the market direction through basic moving averages or trend lines before entering a trade.
5. Avoid Overtrading
This results in confusion and increased transaction costs. Maintain a fixed number of transactions per day and focus on quality rather than quantity.
6. Analyze Before You Trade
Avoid trading based on tips or rumors. Analyze chart patterns, news, and historical price behavior to formulate a planned strategy. Many brokers provide useful tools and education on the trading platform for informed trading.
7. Book Profits Regularly
Since intraday trading involves short movements of prices, do not hesitate to think that you’re exiting too soon. Set a target and exit when you achieve it, rather than trying to maximize gains from a move.
Conclusion
Intraday trading offers an option for anyone who would like to participate in a market without long-term commitments. The first step involves having a trading account through a broker approved by the governing authorities. Upon confirming the opening of the account, learn, stay disciplined, and take risks, as all are required to begin one’s journey into intraday trading.
