Besides just knowing a lot of theoretical knowledge about the stock market, trading and the financial sector; investing in stocks also requires practical knowledge. Non-linear and volatile in nature, it is very hard to predict the future direction of the stock market. This very nature of the Indian stock market is the reason why it may have sudden ups and lows, oscillating severely at times. The stock value of any particular commodity may fluctuate up or down within even a single day and leave traders in sometimes very tight and difficult decision making situations.
Day trading in the stock market refers to taking a particular position in the markets with the view of squaring off the position before the end of the day. It aims at capitalizing price movements within one trading day only and is very different from investments. The day trader, unlike investors can only afford to hold positions for a few seconds or minutes; but he can never hold onto any position overnight. In this method of trading; you are protected from any losses that may occur when the stock market is closed.
There are tens of thousands of small investors/businessmen, professionals, etc. who throng every day, hoping to make profits through intra-day trading. With this type of trading, the person gets instant gratification – which is a feel-good factor for the trader. He thus, feels that is in control of his finances as he can immediately see his profits rise.
The Indian Commodity Market basically is a screen-based ‘on-line’ derivatives exchange for trading different commodities. Day trading in such a market requires you to be on your toes, at all times! Day trading requires undivided attention, and the investor has to constantly be vigilant of the stock market and his holdings from the opening bell which is at 9 A.M till the end of the trading session at 3.30 P.M
. Some important intra-day trading tips to double your money include:
Invest in only those areas where you can AFFORD to lose: Riskier than even investing in stocks, intra-day trading carries a huge amount of risks. It is important to exercise caution and prudence while trading, and only those amounts should be invested in where you can actually afford to lose. In a matter of a few minutes, any unexpected movement/ stir may wipe out your entire investment.
Do not trade in many stocks at the same time: While day-trading, it is advisable not to invest in more than 203 stocks at one time. While diversification is important in overall investing, day-trading does not leave you with the same amount of time and freedom. Besides this, monitoring your stocks is also very important, and more than 3 stocks will be extremely difficult to monitor.
Opt for liquid (highly) shares: You will not be able to square off your position at the end of the day if you invest in mid-cap or small-cap shares. Index-based and large-cap investments, which are highly liquid, should be traded in.
Pre-determine your entry price & target levels: Pre-condition your mind-set to follow a certain pattern. Fix your entry price as well as target levels before you buy a stock.
Keep the volume/quantity of trading uniform: It is advisable to stick with a certain quantity whilst day trading. Although you may increase this in future, it is not wise to change this amount. : if you trade five lots of nifty future, keep this uniform until you feel confident to increase this amount.
This, it is important to remember that in day trading you will need to use stop loss to contain any sort of impact.
By following, the above commodity market tips you are sure to reap benefits or at least be on the right path! Find out more about cam here.