Intraday trading is a simple approach to make money, but it has advantages and disadvantages. So, what is the optimum time to trade intraday?
Intraday trading is one of the most competitive trading bases in the stock market. The share market is influenced by several variables that are all interrelated and beyond the control of any single person.
What you can control is a thorough examination of the firm in which you intend to invest. One must examine the company’s performance in light of its fundamentals, such as its market capitalization.
- Market Position,
- Past Performance,
- Turnover of Sales
- Debt to Equity Ratio And Loans
- Order Book,
In addition to the increase in value and bonus shares granted over time, there is little risk of losing money in the stock market if the study is scientific. Predictions are based on market behavior and human psychology, and no one can forecast exactly what investors will do or how stocks will react.
Simply put, when someone buys stock in a public firm, they are buying a small piece of that company. Investors or traders profit when the price rises owing to market movements, which is known as capital appreciation.
Dividend profits, which are given in stock rather than cash to shareholders, are another source of income for investors. The explanation appears clear, yet it is not.
Another riskiest and profitable stock market terminology is Intraday Trading. Intraday trading, often known as day trading, is when a person buys and sells stocks on the same trading day.
On the stock market, share values fluctuate throughout the day, and traders try to profit from these fluctuations by buying and selling shares.
If the share background study and market fluctuations are on the same page, one trader may make a good profit. If you fail to do so, the broker may square off your position or convert it to a delivery trade.
This type of trading is quite lucrative, but it necessitates a thorough understanding of the company and all of its elements. Another important consideration is the ideal time frame for Intraday trading.
Intraday Trading Fundamentals
Before investing one’s hard-earned money, one must first understand the fundamentals and principles of intraday trading. The explanation appears straightforward, yet it is not.
Assume an intraday trader purchases specific stocks in a company. On whatever platform he or she invested, he or she referred to it as an intraday. This informs the broker that the user want to trade the stocks of the same company before the market shuts.
If a stock starts trading at Rs. 850 and swiftly increases to Rs. 950 within a few hours, it is said to be volatile. For example, if 1,000 stocks were sold for Rs 950, a profit of Rs 100,000 could be made.
Best Time Frame For Intraday Trading
Intraday trading is a term that refers to the complete process of trading that occurs during a 24-hour period. Consequently, whether you make a profit or a loss depends on the decisions you make during these few hours.
Identifying the best period is extremely beneficial to long-term intraday traders. Even experienced intraday traders who trade outside of the optimal intraday trading period risk losing money. This raises the question of when is the best time to trade intraday.
Intraday trading is best done between 9:30 and 10:45 a.m. Intraday trading should take place within one to two hours of the stock market opening. In the first few minutes of the market opening, equities are likely to react to the previous night’s news.
So, what are the benefits of trading during the first few hours after the market opens? Here are some of the most important considerations.
- The opening hour of trading has seen some of the most significant price changes of the day. It can yield large returns compared to other trading periods if done correctly and with competence. In comparison, the costs could be significant if done incorrectly.
- The most turbulent hour of trading is usually the first one. This provides many opportunities to execute the best bargains of the day.
- The first hour of trading provides the necessary liquidity for market entry and exit. Liquid equities are more likely to be sold off rapidly since they trade at a higher volume.
- Deals take longer and occur in smaller quantities after the first opening hour. For intraday traders who need to conclude their trades by 3:00 PM, this is a disastrous combination.