Trading India’s stock market through intraday strategies can potentially yield impressive profits in just hours. Imagine buying 1,000 shares at Rs 500 and selling them at Rs 550, resulting in a Rs 50,000 profit within a single trading day! This approach, also known as day trading, involves purchasing and selling stocks on the same day before markets close.
The growing popularity of day trading is evident with platforms like Groww becoming India’s No.1 stockbroker with over 10 million active investors. However, before you dive into intra day trading in India, you should understand that it carries significant risks, often involving transactions worth lakhs or crores of rupees.
What is day trading and how does it work in India
Day trading, essentially purchasing and selling securities within the same trading day, has become increasingly popular among Indian investors seeking short-term profits. Unlike delivery trading, where shares get credited to your Demat account for long-term holding, intraday positions must be closed before market hours end.
When you place an intraday trade in India, you’re taking a position based on expected price movements rather than acquiring ownership of shares. One major advantage of intraday trading lies in the leverage provided by brokers, allowing you to control larger positions with smaller capital. This means if you identify a promising setup during morning hours (9:30-10:30 AM), which typically show higher liquidity and volatility, you can potentially maximize your returns without committing the full share value.
Top Indicators and Tools for Successful Day Trading in India
Indian day traders use different technical indicators to decide their trades in the country’s fast markets. These tools are useful in finding the right time to trade by examining price patterns, current trends, and investors’ beliefs.
The Relative Strength Index (RSI) is considered a momentum indicator that shows the change and pace of prices by charting them on a scale of 0 to 100. If RSI values are above 70, it means the market is overbought, and if values are under 30, the market is oversold. A lot of traders set the thresholds for intraday trading at 80 and 20 to avoid getting false signals.
Moving averages help you see the real patterns in a chart’s price action. Day traders rely on exponential moving averages with longer delayed simple moving averages to find when they can join trades.
They are formed by a middle 20-period moving average together with upper and lower bands that are two standard deviations removed. Volatility increases the width of these bands and decreases it when volatility is low, indicating possible breakout opportunities to traders.
How to Choose Stocks and Execute Profitable Intraday Trades
Selecting suitable stocks is what helps day traders succeed in India. Initially, focus on very liquid stocks, i.e., the number of shares traded per day is one crore or more. The result is that exiting and entering can be done fast with little effect on the price.
In addition, invest in stocks that have been measured for their volatility. Although unpredictable prices of volatile stocks create more possibilities for profit, it’s necessary to determine if the changes are due to predictable trends or something else.
Conclusion: Mastering Day Trading in India Requires Strategy and Discipline
Day trading in India is successful only when the trader has discipline, extensive knowledge, and the right strategy. In this guide, we have looked at the important aspects that support good intraday trading. Knowing the market timing, rules, and tools is the main step to avoid losses.
Day trading decisions are mostly guided by technical analysis. These four indicators – RSI, moving average, Bollinger Bands, and MACD – together provide a clearer picture of price movement than when used alone.
Choosing the right stock is the key factor for successful day traders. Trading with high-liquidity stocks and observing their volatility is better than trading penny stocks.
