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Intraday Trading Tips, Strategies, Formula



Most of Intraday traders work on High leverage / Margin provided by the brokers which might result in to huge loses unless they follow strict money management and should not trap in to more and more trades , the ideal way is to make as much less trades as possible using best trading techniques or strategies.

To make money in market the day trades uses different –different Intraday trading strategies, formula or trading techniques.

We would be talking about some techniques or strategies that a novice day trader can learn and use the same for his day trading.


Investment & Intraday Trading Formula

  • The best time to invest is when the market is down, however you must remember the fundamentals to avoid risks.
  • Avoid chasing a stock and buy when the market is in the grip of panic
  • Try to invest only in the fundamentally strong stocks and that are undervalued.
  • Try to avoid loss-making companies and look for dividend paying record
  • Try to invest a fixed amount every month on the stock
  • Try to buy when everyone is selling and sell when other traders buys

PIVOT POINT THEORY

This theory would help us to calculate the support and resistance levels for that stock for the next day.

We can calculate the support and resistance levels for that stock for the next day by taking previous day’s trading prices of a stock.

Support and Resistance terms are very simple to understand and self explanatory in nature, a stock which is moving higher may stop at resistance level and come back. Similarly, a stock moving lower, may stop at support level and reverse its move. Stock is expected to move to next support or resistance level after crossing first support or resistance level.

Pivot Point Formula: Pivot Point Theory helps you forecast the intraday stock movement for next trading day. To understand this theory we need to select a stock (Reliance Industries) for Intraday Trading and we need its previous day trading data-

  • Intraday high price it touched (H),(Exp High Price : Reliance Industry : 1250)
  • Intraday low price it touched (L) , (Low Price : Reliance Industry : 1200)
  • The previous day closing price (C) for that stock.(Closing Price: Reliance Industry : 1225)
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    Add theses three values- H+L+C=X(X=1250+1200+1225=3675)

    Divide the total value by 3 (P) = X/3 (P=3675/3=1225)

    Multiply it by 2:- X/3*2=Y(Y=1225*2=2450)

    This value P (1225) is called the Pivot Point. Stock continues to trade above Pivot Point is likely to move higher towards first resistance level and above that towards second resistance level. If stock continues to trade below the Pivot Point, it is likely to move lower towards first support level and after that towards second support level.

    Let’s calculate resistance and support levels:

    First resistance level (R1) = It is the difference between the {Pivot Point X 2} or Y and the Intraday Low price. Second resistance level is nothing but addition of Pivot point with difference between Intraday High & Low Price.

    R1= Y-L (2450-1200=1250)

    R2=P+ (H-L) (1225+(1250-1200)=1275)

    First support level (S1) = it is the difference between Y and the Intraday High price.

    S1= Y-H (2450-1250= 1200)

    S2= P-(H-L)(1225-(1250-1200)=1175)


    FRACTION THEORY

    This theory is also based on previous day price movements of a stock.

    Sum up high (H), low (L) and closing (C) price of previous day of the stock and multiply it by 0.67 (ratio of 2:3 as in pivot theory and it is constant)

    (H+L+C)* 0.67=Y(Y= (1250+1200+1225)*067= 2462.25))

    Resistance (R1) = Y-L(R1=2462.25-1200=1262.25)

    Support (S1) = Y-H(S1=2462.25-1250=1212.25)

    Possible Buy (P.B.) = Y-C(Possible Buy= 2462.25-1225=1237.25)


    Also Read: Best Technical Analysis Software in India


    Some Important Intraday Trading Tips

    To Improve Intraday trading skills, you need to keep in mind some important points listed below while doing the intraday trading.

    • Stock selection: To improve your chance of earning the stock which you select for intraday trade plays a key role. So how should you find a perfect stock for intraday trade? The prime rule is that always select “A” group stock for intraday which has good trade volume and never trap in to high volatile stocks like PC Jewellers or Vakrangi. Select stable stock and less volatile for intraday which gives movement with market. Buy Bullish or strong stocks in rising market and Sell bearish or weak stocks in falling market.
    • Stop Loss : Risk management plays a big role in intraday trading. To restrict / minimize your losses it is important to have stop loss because it’s not practical that you always get profit every day in all your trade or all your trade would be right only.
    • Market trend: To become successful in intraday trade it is must that you understand the market trend and go with the trend only. You should not assume to buy any stock because it has fallen much or sell a stock because it risen too much, you should study the trend and act accordingly. It is important to remember that never grab a falling knife or never do bottom fishing.
    • Stocks in News: If you want to play safe, just wait for good opportunity rather than jumping in any random trade. Stocks which are driven by news can give big movement and can give you big losses too. So stay cautious in this kind of stocks and avoid the stocks which are news driven or in which any data, news or results going to announced.
    • Overtrading: You should not get yourself engaged in too many trades which you can’t handle or concentrate. It would be good to involve in 1-2 trades which can give you enough money for intraday rather than 5-10 trades in a day.
    • Emotions: While doing intraday trade you should not be emotional in making trade decisions. If you think emotionally, would not take right decision i.e. you might hold your losing trade in hope of better results and once loss will be increased, you won’t be able to exit in a big loss. So you need to have a practical approach while trading. You should always know that you can cover small loss and can cover in next trade but if it becomes bigger, you can’t survive with low capital.
    • Greed: Sometimes Intraday trades make you greedy and in the hope of more profit, you might avoid booking profit at the right time and lose that ultimately because they can’t be booked on time. One should keep balance between fear and greed because if you will not book profit on time, you may lose it.
    • Never Average: This is the most common mistake which every trader makes as they wants to average their losing position which makes it worst to exit because if you increase the quantity, risk will also be increased too and you won’t be able to book loss which can vanish your whole capital. Never try to average loosing trade. Just cut the loss and move forward.
    • Follow Basic technical: You should try to get the basic technical knowledge before getting in to intraday trade as it gives you idea that how stock would perform. Like you can follow Power point theory or fraction theory to understand the support & resistance level and can enter at the right time.
    • Buy on Support and Sell on Resistance: For intraday trade this is the basic rule which everyone should know that you have to buy strong stocks at support for intraday and sell weak stocks at resistance. You just do little home work before getting in to any intraday trade which will help you to succeed.