Intraday trading may be an easy way of earning money, but it has its own merits and demerits. So what is the best time for Intraday Trading?
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 proper analysis of the company in which you are investing. One must study the company’s performance based on its fundamentals, such as its
- Market Position,
- Past Performance,
- Sales Turn Over,
- Loans And Debt To Equity Ratio,
- Order Book,
As well as the rise in value and bonus shares issued over time; if the study is scientific, there is little chance of losing money in the stock market. Market behavior and human psychology are used to making predictions, and no one can precisely anticipate what investors will do or how stocks will react.
In simple words, when a person purchases stock in a public company, they purchase a little piece of that company. And when the price rises due to market fluctuations, the investors or traders make a profit, which is known as capital appreciation.
Investors too can profit from a secondary source: dividend profits, which are distributed in stock rather than cash to shareholders. Although the explanation seems to be straightforward, 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.
Share values fluctuate throughout the day on the stock market, and traders do their hardest to profit from these changes by buying and selling shares.
One trader may make a good profit if the share background study and market fluctuations are on the same page. Otherwise, the broker may square off your position or convert it to a delivery trade if you fail to do so.
This kind of trading is very beneficial, but it requires a good idea about the firm and all its aspects. Another main factor is the best time frame to invest in Intraday trading.
Intraday Trading Fundamentals
Before spending the hard-earned money, one must first learn the principles and fundamentals of intraday trading. The explanation may appear simple, but it is not.
Let’s say an intraday trader buys certain stocks in a firm. Referring to it as an “intraday” on whichever platform he or she used to invest. This tells the broker that the user wants to trade the same company’s stocks before the market closes.
If a stock begins trading at Rs. 850 but quickly rises to Rs. 950 within a few hours. For instance, if 1,000 equities were traded for Rs 950, one could have gained a profit of Rs 100,000.
Best Time Frame For Intraday Trading
“Intraday Trading” is a term that describes the entire process of trading that takes place between 24 hours. Thus, whether it will be a profit or loss day, depends on your choices made between these few hours.
Long-term intraday traders benefit greatly from determining the optimal period. Even experienced intraday traders might lose money if they trade outside of the optimal intraday trading period. This raises the question of what time window is optimal for intraday trading.
Best Time Frame For Intraday Trading is between 9:30 and 10:30 a.m. The ideal time window for intraday trading is within one to two hours of the stock market opening. As the equities are likely to respond to the previous night’s news in the initial few minutes of the market opening.
So, what are the advantages of trading in the initial few hours of the market opening? Some of the key factors are discussed here.
- Stocks traded in the first hour have proved to have some of the biggest movements of the whole trading day. If done correctly and with expertise, it can provide huge profits compared to other trading periods. In comparison, if done incorrectly, the losses might be enormous.
- The opening hour of trading is typically the most volatile. This offers sufficient chances to execute the finest deals of the day.
- The first hour of trading gives the required liquidity to enter and exit the market. Because liquid stocks trade at a larger volume, they are more likely to be sold off quickly.
- After the first opening hour, deals often take longer and occur in lower quantities. It results to be a terrible combination for intraday traders who need to close their trades by 3:00 PM.