Intraday trading, also known as day trading, is the process of buying and selling stocks within the same trading day. The goal is to capitalize on price movements that occur over a short period. While it can be profitable, it also involves a higher risk compared to long-term investing.
If you are planning to step into intraday trading, you need more than just luck. You need discipline, strategy, and understanding. Let’s discuss some effective tricks to improve your intraday trading performance.
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Tips for Successful Intraday Trading
Here are 7 tips you can follow for effective intraday trading:
Volatility Backed by Volume
Differentiate between price movements that are volume-backed and those that are just random spikes on the screener for Indian stocks. When both volume and price rise together, it indicates institutional activity.
You can use tools like the volume profile or observe volume bars on a 5-minute chart to confirm whether the breakout is real. Avoid taking positions when prices move sharply but volume remains flat, as such moves are often false breakouts that reverse quickly.
Avoid Mid-Day Trading
Intraday opportunities are generally clustered in the first and last 90 minutes of the market. Between 12:30 PM to 2:30 PM, liquidity usually dries up, and many stocks enter a range-bound phase. Trading during this window often leads to stop-loss hits or fake breakouts. It is better to sit out during these hours unless you see a news-based move or a very clear structure.
Identify Trap Candles
Trap candles are those that exhibit strong price movements but quickly reverse direction, trapping traders. Look for long upper wicks after a breakout or long lower wicks after a breakdown.
These indicate rejection and false breakout. If such candles appear near important levels, such as the VWAP, previous highs or lows, or round numbers, be cautious.
Avoid Thinly Traded Stocks
Market orders are executed at the best available price, which can be risky in stocks with low liquidity or wide bid-ask spreads. You might end up buying much higher or selling much lower than expected, especially during volatile spikes.
Always use limit orders to control your entry and exit prices. Before entering a trade, check the spread between bid and ask, and avoid stocks with more than ₹0.50 spread. Thinly traded stocks can also be easily manipulated, leading to unpredictable price behaviour.
Wait for a Retest
Do not chase breakouts blindly. A high-quality breakout is often followed by a pullback (retest) where the price revisits the breakout level and then continues in the direction of the trend.
Waiting for a retest on the intraday screener confirms the breakout’s strength and improves risk-reward. For example, if a stock breaks above ₹120 resistance, wait for it to return to the ₹120–₹121 zone and show price rejection before entering.
Have Pre-defined Risk
Before placing any intraday trade, define your risk amount clearly in terms of rupees, not percentage. Decide how much capital you are willing to lose on a single trade and place your stop-loss accordingly.
For example, if your risk per trade is ₹500, calculate the quantity based on your stop-loss distance. This way, your losses remain consistent, even when your stop-loss range changes in response to volatility.
Avoid the First 15 Minutes
The first 15 minutes after the market opens are marked by high volatility and noise, stemming from overnight news, global cues, and pending institutional orders. You may be tempted to trade immediately, but this period often leads to false signals. During this time, observe the price action and identify the initial balance.
Conclusion
Intraday trading is not about chasing every move; it is about being patient, precise, and prepared. From avoiding midday trades to spotting trap candles and waiting for retests, each trick helps you trade smarter, not faster.
By sticking to liquid stocks, managing your risk, and understanding volume patterns, you give yourself a better edge. Remember, good intraday trades come from clarity, not chaos.
