Day Trding Knowledge ·
If index is in positive from yesterday and the share you are
holding is in minus then it should be cut and if intraday trend of index is in
buy then one should buy a stock in which is in plus. ·
If index is in minus then one should look to short stocks which
are minus and not stocks which are in plus. ·
It is not necessary that a stock which is weak today during
intraday trading might be weak tomorrow also, simultaneously if a stock is
strong today might not be strong tomorrow ·
If US Markets have gone up overnight, the markets here in all
probability will open strong, so one should be quite careful when buying stocks
as the general psychology of public is to buy when good news is there. ·
Being contrarians is very important while trading intraday. ·
Stop loss is a must while trading intraday. ·
Always trade in very liquid stocks i.e. which have very high
volume because as entry and exit can be very fast in such stocks. ·
Do papers trading before you actually start trading so that when
you start making paper profits, then shift to actual trading ·
Keep your volume constant e.g.: if you trade in five lots
of nifty future then trade in five lots only. This position can be increased
only when you are satisfied with your trading for a month. It should not be
that one day you buy five lots and next day you trade in ten lots and third day
you get a loss and stop trading for two days. ·
Fear and Greed are at maximum levels while trading intraday so
always have less position when you are new to intraday trading as otherwise you
will be mostly under tension. "Intra day trading
strategy is defined as an overall trading strategy characterized by the regular
transmission by a customer of a multiple intra day electronic orders to affect
both purchase and sale in the same security or securities." It seemingly looks to be
the simplest and the most rewarding. But in intraday trading one has to be very
fast and quick and have to be on your toes always, so there are certain rules
which one has to keep in mind while doing day trading in Indian stock market or
in any stock exchange
Day trading is
characterized by multiple intra-day trades executed to take advantage of small
price movements in stock. Stocks are generally held for minutes or hours and
generally positions are closed out overnight for small profits or losses. In
the day trading study, a day trader is described as "an individual who
conducts intra-day trading in a focused and consistent manner with a primary
goal of earning a living through the profits derived from trading
strategy".
DISADVANTAGES:
You must act instantly, if you
stop to think you are dead. With daily chart you have a luxury of time but
intraday chart demand immediate action.
HELPFUL POINTS FOR INTRA DAY TRADING:
What you must
NOT do 1. Don't panic The market is volatile.
Accept that. It will keep fluctuating. Don't panic. If the prices of your
shares have plummeted, there is no reason to want to get rid of them in a
hurry. Stay invested if nothing fundamental about your company has changed. Ditto with your mutual fund
does the Net Asset Value deep dipping and then rising slightly? Hold on. Don't
sell unnecessarily. 2. Don't
make huge investments When the market dips, go
ahead and buy some stocks. But don't invest huge amounts. Pick up the
shares in stages. Keep some money aside
and zero in on a few companies you believe in. When the market dips --buy
them. When the market dips again, , you can pick up some more. Keep buying
the shares periodically. Everyone knows that they
should buy when the market has reached its lowest and sell the shares when the
market peaks. But the fact remains, no one can time the market. It is impossible for an
individual to state when the share price has reached rock bottom.
Instead, buy shares over a period of time; this way, you will average your
costs. Pick a few stocks and
invest in them gradually. Ditto with mutual fund
Invest small amounts gradually via a Systematic Investment Plan Here, you
invest a fixed amount every month into your fund and you get units allocated to
you. 3. Don't chase
performance A stock does not become a
good buy simply because its price has been rising phenomenally. Once
investors start selling, the price will drop drastically. Ditto with a mutual fund every
fund will show a great return in the current 4. Don't ignore
expenses When you buy and sell
shares, you will have to pay a brokerage fee and a Securities Transaction Tax.
This could nip into your profits especially if you are selling for small gains
(where the price of stock has risen by a few rupees). With mutual funds, if you
have already paid an entry load, then you most probably won't have to pay an
exit load. Entry loads and exit loads are fees levied on the Net Asset Value
(price of a unit of a fund). Entry load is levied when you buy units and an
exit load when you sell them. If you sell your shares of
equity funds within a year of buying, you end up paying a short-term capital
gains tax of 10% on your profit. If you sell after a year, you pay no tax
(long-term capital gains tax is nil). What you MUST do 1. Get rid of the
junk Any shares you bought but
no longer want to keep? If they are showing a profit, you could consider
selling them. Even if they are not going to give you a substantial
profit, it is time to dump them and utilize the money elsewhere if
you no longer believe in them. Similarly with a dud fund;
sell the units and deploy the money in a more fruitful investment. 2. Diversify Don't just buy stocks in
one sector. Make sure you are invested in stocks of various sectors. Also, when you look at your
total equity investments, don't just look at stocks. Look at equity funds
as well. To balance your equity
investments, put a portion of your investments in fixed income instruments like
the Public Provident Fund, post office deposits, bonds and National Savings
Certificates. If you have none of these
or very little investment in these, consider a balanced fund or a debt fund. 3. Believe in your
investment Don't invest in shares
based on a tip, no matter who gives it to you. Tread cautiously. Invest in
stocks you truly believe in. Look at the fundamentals. Analyze the company and
ask yourself if you want to be part of it. Are you happy with the way
a particular fund manager manages his fund and the objective of the fund? If
yes, consider investing in it. 4. Stick to your
strategy If you decided you
only want 60% of all your investments in equity, don't over-exceed that
limit because the stock market has been delivering great returns. Stick to your allocation. General Market
Advice: 2. Buy when markets are in the grip of panic. 3. Only buy fundamentally strong stocks, which are undervalued. 4. Buy stocks grown in top line and bottom line over the past years. 5. Invest in companies with proven management. 6. Avoid loss-making companies. 7. PE Ratio and Growth in earnings per share is the key. 8. Look for the dividend paying record. 9. Invest in stocks for sure returns. 10. Stocks have been the high yielding asset class over the past. 11. Stocks are an asset class. 12. The basic property of any asset class is to grow. 13. Buy when everyone is selling and sell when everyone buys. 14. Invest a fixed amount each month. Last But not least Trust
our tips and then invest to earn huge profit |
|
|||||
Make a Free Website with Yola.
