It is often presumed that investors in the share market can earn profits only by investing for longer periods. But one can also earn some quick bucks every day, in intraday trading.
The basic requirement for intraday trading is to know how to open a trading account. It is simple. To open a Demat and trading account, documents required include PAN Card, Address Proof (Passport, Aadhar Card, Voter ID, Driving license, any Utility Bill, and Bank Statement), passport size photo, and a canceled cheque. If you open
Next comes the important question, what is intraday trading and how is it different from delivery trading. The fundamental difference is, in intraday trading, all the open positions are squared off the same day while in delivery trading, an investor can buy and hold stocks for a longer time frame.
Here’s how you can earn Rs. 1 lakh per month from the share market:
As the name implies, intraday trading is the buying of stocks and selling them before the market closes. Alternatively, one can also sell stocks and buy them back before the end of the market session.
Research Before Investing
Intraday trading is not everyone’s cup of tea. To earn profits in a shorter period is more challenging and demands adequate research before investing.
Good knowledge of the sector to which the share belongs to is crucial. Before homing in on stocks, monitor price fluctuations, trend patterns, the volume of trade, and volatility through paper trading or virtual trading.
Follow a disciplined approach
You should always follow a disciplined approach and take calculated risks, especially when the stock market is volatile. Risks are inherent in the stock market and therefore you are required to develop a well laid out strategy.
Keep in mind the brokerage charges
Often, brokerage charges or fees charged by brokers are high in intraday trading. Hence, keeping in mind the brokerage charges per transaction helps to plan the number of transactions to be carried out. This reduces the impact of brokerage charges on the overall returns.
Choose Stocks that move with the trend
Unlike long-term investors, an intraday investor needs to be more cautious while gauging the movement of the stock and trade accordingly. Going against the market trend tends to be dangerous in intraday trading.
Price fluctuations and trend reversals can be triggered due to numerous reasons. But, the choice of stock should only be made considering the market trend. If the market is bullish, buy stocks that have probabilities of moving upside. On similar lines, if the market is bearish, sell stocks to earn profits.
Choose High Volatile Stocks
In intraday trading, an order is defined as MIS order or Margin for Intraday Square-Off order to get trading limits up to ten times the transaction value. Though the broker allows a significant margin on the stocks, investors still end up losing money.
Liquid stocks with high volumes of trade every day are highly volatile. Tapping the volatility of liquid stocks is the key to earning profits in intraday trading.
Diversify your portfolio
You should try to broaden your portfolio by diversifying across asset classes. This will help you maximize your returns and minimize risks.
Book small profits in multiple trades
Intraday Trading is all about booking small profits without holding on to the positions for long. Instead of trading in a single stock, indulging in multiple trades benefits by reducing the risk of loss involved in a single stock.
By taking care of risks in intraday trading, the overall returns are also taken care of simultaneously.