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Top 10 Intraday Trading Principles

Before listing the Top 10 Intraday Trading Principles for Beginners let us first understand

What is Intraday Trading?

Intraday trading is the act of buying and selling a financial instrument during the same day or multiple times during the day. Taking advantage of small-scale mobility can be a profitable game — if played in the right way. But it can be a dangerous game for newbies and anyone who does not follow a well-thought-out strategy.

There are lots of online brokers in India who have professional or advanced versions of their forums that include real-time live streaming quotes, advanced charting tools, and the ability to place and edit complex orders in quick succession.

Top 10 Intraday Trading Principles
Top 10 Intraday Trading Principles


Having technical or basic knowledge is required but most of the time it is not enough, a qualified and disciplined Intraday trader is more successful. This blog aims to provide an overview of the Top 10 Intraday Trading Principles or golden rules of trading that have been a major factor in the success of many traders and investors.

Successful intraday trading strategies will always follow the trading principles and rules to make their trades consistently profitable.

It is a commonly known statistic that 90% of people lose money in the stock market to the rest of the 10%.
This blog aims to provide the principles that differentiate the winning 10% from the losing 90%.

What are Intraday Trading Principles?


What are the Fundamentals of Intraday Trading?


1. Knowledge is Power

In addition to knowledge of basic trading processes, Intraday traders need to keep up with the latest stock market news and stock events — RBI’s interest rate strategies, economic outlook, etc.

So do your homework. Make a list of stock wishes you would like to trade and keep yourself informed about selected companies and general markets. Scan business news and visit trusted financial websites.


2. Set Money Aside

Examine the amount of money you plan to invest in each trade. Most successful Intraday traders have less than 1% to 2% of their accounts per trade. If you have an INR 40,000 in your trading account and are willing to risk 0.5% of your maximum income per trade, your maximum loss per trade is  INR 200 (0.5% x 40,000).

Set aside the remaining amount of money you can trade and you are ready to lose. Remember, it may or may not happen.


3. Set Aside Time, Too

Intraday trading requires your time. That is why it is called Intraday Trading. You will need to give up most of your day. Don’t think about it if you have a limited amount of time to spend.

The process requires the trader to track the markets and identify opportunities, which may arise at any time during trading hours. Going fast is the key.


4. Start Slow

As a beginner, focus on one to two stocks during the session. Tracking and finding opportunities is easy with a few stocks. Recently, it has become commonplace for you to be able to trade in fractional shares, so you can specify certain amounts, and the minimum dollar you wish to invest.


5. Avoid Penny Shares

You probably want deals and discounts but stay away from penny stocks. These stocks are usually illiquid, and the chances of hitting the jackpot are usually slim.

Most stocks trading below INR 5 per share are listed on major stocks and are only traded over-the-counter (OTC). Unless you see a real opportunity and do your research, avoid this.


6. The Time Of Those Trades

Most orders placed by investors and traders come into effect as soon as the markets open in the morning, which contributes to price fluctuations. An experienced player can see patterns and choose accordingly to make a profit. But for newborns, it may be best to study the market without making a move in the first 15 to 20 minutes.

The intermediate hours do not usually change slightly, and then the movement begins to rise to the closing bell. While rushing hours offer opportunities, it is safer for beginners to avoid them at first.


7. Cut Loss With Limit Orders

Decide what kind of orders you will use to get in and out of the business. Will you use orders in the market or limit orders? When you place a market order, it is used for the best price available at the moment — therefore, there is no price guarantee.

A limited order, on the other hand, guarantees value but not execution.1 Limited orders help you trade more accurately, where you place your (not unrealistic but usable) price to buy and sell. Sophisticated and experienced Intraday traders may use alternatives to enclose their positions.


8. See the Truth About Profit

The strategy does not always have to win to make a profit. Most traders win only 50% to 60% of their trade. However, they did more than win the losers than lose the losers. Make sure the risk in each trade is limited to a certain percentage of the account and that the entry and exit routes are clearly defined and documented.


9. Stay Cool

There are times when stock markets test your senses. As an intraday trader, you need to learn to keep greed, hope, and fear at bay. Decisions should be based on reason and not emotion.


10. Stick to the Plan

Successful traders are quick to jump on the bandwagon, but they do not have to think fast. Why? Because they have developed a trading strategy ahead of time, as well as an instruction to adhere to that strategy. It is important to follow your formula closely rather than trying to chase profits. Do not let your emotions get the better of you and cause you to abandon your strategy.

There is a mantra among the traders of the day:

“Plan your trade and trade with your plan.”

What’s Next?

I hope you enjoyed reading about Intraday Trading Principles.

Check out our other blogs on Algo Trading: What is Algorithmic Trading? , Things to Know Before Starting Algorithmic Trading  and Learn Algorithmic Trading: A Step By Step Guide

Disclaimer: All data and information provided in this article are for informational purposes only. Myalgomate® makes no representations as to the accuracy, completeness, correctness, suitability, or validity of any information in this article and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. All information is provided on an as-is basis.

Avatar Of Harsh Kothari

Harsh Kothari

Engaged in the development of Algo Trading Platforms. A self-starter who is keen on driving business through collaboration across functional divisions to deliver best-in-class outcomes for the organization. I am a seasoned product person, and have played pivotal roles in driving growth both in my current and previous organizations by delivering game-changing products. Currently, I am working on building an Algo trading business. | +91 8401718185


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