The Ultimate guide to Intraday Trading

Intraday Trading has fascinated many newbie investors and traders over years. But only handful of them really achieved the success they dreamt of. What makes these people special? And why most of the traders fail in Intraday Trading. Let’s try to explore the answers to these questions in this Ultimate guide to Intraday Trading. I have compiled a list of Day Trading Tips and secrets which would help you become a successful Intraday Trader.

Intraday Trading

5 Things to know before you start Day Trading:

  1. 1/10th Rule: As per this rule, you should always start with only 1/10th of your capacity to invest/lose. For example, if you can afford to invest/lose Rs. 20000 per week, you should start with only Rs. 2000 per week. There is a strong reason behind this rule which will be explained later in the article.
  2. Losses are inevitable: Be comfortable with the truth that you cannot always win the trades. Losses will occur occasionally. If you start day trading with a mindset to get rich quick, you will lose the money and will end up disappointed. All you have to ensure is that you have more “wins” than “losses”. This is the reason you are advised to follow the 1/10th rule. By investing only 1/10th of your capacity, you will not be disappointed with initial losses. You will have more opportunities to trade as you did not invest all of your capital on a single trade or in a single day. Make sure to place “Stop Loss on every trade. If you lose your entire weekly budget in a matter of days, do not trade further. Wait for the next week. There are no shortages of good trading opportunities in the market.
  3. Capital Preservation: This topic is so vast that it deserves a separate article. As a beginner, it should be your primary goal to recover your trading capital as soon as possible. For example, if you are earning 20000 Rs per week on Rs 100000 investment, your investment will be recovered in week 5. So from 6th week onwards you will be reinvesting and trading the profit. You would be less devastated by the losses you face in the trade as it is merely a “loss in profit”. Make it your goal to recover your initial investment before you begin to take more risk.
  4. Trading Plan: The only difference between Gamblers and Day Traders is that the Day Traders have a plan. Do not just trade anything just because it looks fancy. Make a checklist of what you want to trade and back it up with why you want to trade. Learn to read the Candle Stick chart patterns and price action indicators. Learn to identify trends. Do not trade anything without a reason. Your trade must be backed up with proper analysis. At the end of the day compare your results with your trading plan and see where it went right or wrong. You know how gamblers lose their money? When they start losing money they start gambling more in search of the one Golden Bet that will recover all their previous losses. Draw your limits and make sure you do not cross them. Stick to your plans.
  5. Master your Emotions: This is what differentiates an amateur trader from an expert. An expert trader avoids over thinking and over analyzing. If your technical analysis reflects a positive sign on a trade, go for it. Never let greed, temptation and anger muddle your trading decisions. Learn to master your emotions. Market does not care about your feelings. Most of the beginners blame market when they lose money. It is up to you to make proper decisions based on proper analysis. Make sure your decisions are based on your trading plans and analysis, not on your emotions.

7 Steps to become a Successful Trader

11 Practical Tips for Intraday Trading:

  1. Picking up the right stock is extremely important. You can go for the stock which has high trading volume. Stock with higher volume suggests that there is a lot of activity going on within it. Higher volume provides better liquidity. Keep in mind to tame your emotions. Just because you a negative feeling about some stock does not mean that it does not have good trading opportunities.
  2. Choose a combination of candle stick chart patterns and indicators that is easier for you to read, depict and analyze. Not all chart patterns and indicators are 100% accurate but they provide valuable insights into the price movement. A simplest, neat and clean combination is of 15 and 50 days simple moving averages combined with Volume and Relative Strength Index.
  3. Check the High and Low of last 25 days of the stock. This will give you an idea about the height and depth of trading opportunities. The higher the difference between the movements of High and Low, the better opportunities are there to trade.
  4. Avoid trading between the consolidation periods. It is the time when there is indecision about the direction of the price. Learn to read the chart patterns to identify the ongoing consolidation. Consolidation period can be identified as Horizontal Flat movement of the price.
  5. Learn to identify entry and exit points. Camarilla pivot points are the most useful in identifying the entry and exit points. It will also help you find the Support and Resistance Level.
  6. Find the appropriate Lot Size to trade. Calculate the average trading lot size of the stock for the last 15 days to identify the perfect lot size for you to trade.
  7. Learn to identify the entry of Bulls and Bears. This is extremely helpful to make a profitable trade as you can know the direction of the price by identifying the entry of Bulls and Bears. The movement in the High, Close, Open and low combined with Volume can help you find the entry of Bulls or Bears.
  8. Instead of going through the chart pattern of every stock, make a list of chart patterns you are comfortable with and choose the stock based on the pattern it has at the end of the day. Here you will find the Chart Patterns created at the end of the day and can pick the stock with strong indicators : http://www.topstockresearch.com/CandleStickPatterns/OneDayCandleStickPatternsForIndianStocks.html
  9. Make a checklist. Go through your checklist before you make a decision to trade the stock. Your checklist should be compatible with your trading plan. Read How to pick Stocks for Intraday Trading.
  10. Remember the fact that leverage is two sided sword. Use it wisely. It can destroy wealth as much as it can create. Read Margin Trading: A Boon for Retail Traders.
  11. Do Paper Trading before you start live trading. Do it at least for a month. Check your progress. Move to live trading once you get comfortable with trading on paper. Online brokers provide virtual money and a simulator to their clients to get used to the market. You can also take advantage of the same.

These are the simplest and most comprehensive guide to Intraday Trading. Remember, it is not a get rich quick scheme. It takes time, patience and discipline to become a good trader. Wish you all the best with your trading endeavors.

Disclaimer: The points mentioned here are solely of the writer. The writer takes no responsibilities for any consequences. Those points are for educating purpose only. Any resemblance with any other writer shall be considered as coincidence as the writer has no intention to distribute any copyrighted material of others.

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  1. HI Mehul,

    Excellent Share !! I really liked all the tips you mentioned.

    As a Trader i always face difficulties in screening stocks to start with, the link you provided seems useeful, willl try it a couple of weeks and see how it goes. Any other way you use to screen or Filter stocks.

    • Hello Harshit,

      I am glad to know you like the tips. There are couple of things which will help you pick the stocks carefully are as follows:

      (1) Always trade blue chip companies. Here is the link where you can find the list of top NSE 100 companies:


      (2) Look for the “unusual spike” in volume
      (3) As a thumbrule, always pick the stock which is in uptrend.
      (4) Use RSI to ensure that the stock is not “flowing” above it’s strength. For example a stock with an RSI of 53.60 has more probability to go up than the one with the RSI of 74.55.
      (5) Find the Average Daily Movement of stock before you place your trade. ADM = Average High (last 30 days) – Average Low (last 30 days). Always trade within that average price movement to get your targets triggered. Trade stocks with higher daily average movements.
      (5) Go with these 3 most effective chart patterns
      (a) Hammer + Volume Spike + RSI
      (b) Engulfing + Volume Spike + RSI
      (c) Gap Up + Volume Spike + RSI

      Feel free to write me at mvp4485@gmail.com for any further questions

      all the best

  2. Great post . how to identify Volume spike in graph /chart ? is it total traded volume / No of buyers ( bids ) & Sellers ( Asks ) count ?

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