INTRADAY TRADING

by Keshav Jangra 08105032 Lovin Mahajan 08105035 Ravikant Lakhera 08105056 Siddhant Punn 08105074 Mohit Mehta 08105088

INTRODUCTION TO INTRADAY TRADING Intraday Trading, also known as Day Trading, is the system where you take a position on a stock and release that position before the end of that day's trading session, thereby making a profit in the buy-sell or sell-buy exercise. Day traders make several trades in a day to maximize profits and keep trading with the movements in the markets. Like any stock trader, to make money through intraday trading at the stock market one must have a trading plan, set limits and stick to them. One must trade based on the data on the screen and not based on emotions like hope, fear, doubt and greed. The main advantage of day trading is the margin amount one gets on ones balance amount. Margin trading is only possible in day trading and not in delivery trading. The extra amount (margin) one gets totally depends on ones broker. Some brokers provide 3, 4, 5, and 6 times extra margin. As one is benefited to get an extra amount to trade (that is margin trading) and earn extra profit, there is an equal probability of losing money. DIFFERENCE BETWEEN TRADERS AND INVESTORS An investor is one who buys shares and hold for weeks to months to years and they are called as short term, mid-term and long term investors respectively whereas Traders buy and sell shares on very frequent basis mostly on day to day basis and hence are called as day traders or intraday traders. For an investor, buying a stock at low valuation and selling at high valuation is the basic aim which doesnt apply to a trader. Investors look for a sizeable gain before completing the transaction whereas traders generally go for small profits. TYPES OF DAY TRADING Scalp traders do multiple trades in a day with very small profits. They buy and sell on various stocks with very small profits. In this type of trading there is less risk as compared to momentum trading. In momentum trading a trader buys or sells the stock and waits for the target to hit inserting stop loss as a precaution if in case market goes against your trade. In other words he waits for good profit percentage and not for small profit. This type of trading is risky because market directions can reverse at any time without any intimation so in such situations your stop loss may trigger. USE OF RESISTANCE AND SUPPORT In simple words the meaning of resistance is opposition. As the name indicates, it opposes the share price going in upper direction. It is the level where share price may stop before continuing its upper journey. Support is the point for a share price to prevent it from falling further. Calculation of Resistance and Support Moving Average Method Pivot Based Method Fibonacci Retracement Levels Parabolic SAR

SELECTING STOCK FOR INTRADAY TRADING The following method can help in selecting a stock which would provide for feasible day trading:

High volume shares Stock in News Shares continuously up or down for last 7 days Top gainers and losers Finding active trading future derivatives

INTRADAY TRADING TIMINGS There are specific occasions during a day or a month or even a year, which need to be given special attention to do or avoid trading. Opening and closing time of the market provide for volatile markets. Movements during the first half hour are difficult to catch and traders square off their trades during the closing time. It has been observed, many times, that Indian share market reacts to opening of European stock markets. European stock markets open at 1:30 pm. Often share markets become volatile and uncertain during derivative expiry week. The derivative contract expiry date is on last Thursday of every month. The share market becomes volatile during this week because traders have to square off their contracts. In Indian corporate sectors, most of the Indian companies publish their quarterly results which can affect their stock movement depending on the expectations of the market. Markets react either positively or negatively based on the announcement of following important numbers: Announcements of important numbers like Inflation figures and IIP figures by the Indian government. Auto sector, telecom sector and most of the other sector announce their sales figure or production figures. Any interest rate cuts buy the RBI or by any banks. Any price hike of the products like auto, metals etc.

QUALITIES OF A GOOD TRADER In order to be a successful day trader, like one needs to have the right tools, right market direction, and the right trading systems in the same way one also needs to have control on ones emotions because the buy and sell orders initialize from your emotions. It is totally true that it is not possible to get rid of your emotions completely but managing at some extent will prove beneficial. The two main emotions that day traders experience are fear and greed. Professional traders know that their emotions are going to affect their trading whether they like it or not. As a result, they develop personalities that allow them to overcome their emotions and trade profitably. Two of the most important personality traits are patience and discipline, because they allow you to handle one of the most difficult aspects of trading. Patience, decisiveness and calmness are three qualities which help every trader head in the right direction even in difficult times. Maintaining a trade log is vital. At the end of the day (or week, or month), replaying trades, and compare the replayed trades to the trading log will help one to determine what caused them, and hopefully know what one needs to avoid the next time.