Understanding the value of time in intraday trading
The one thing you cannot compromise on when investing in stocks is getting the timing right. Especially when we are talking about intraday trading, making the trade at the right timing is all that matters to know whether you are doing a loss or a profit. Read on to know more about intraday trading and understand the value of time.
What is intraday trading?
As the word states very clearly, intraday means ‘within the day.’ Contrary to regular trading, where you can invest for long periods, buying and selling your assets and holdings during the same trading day is known as intraday trading. In other words, it means that all positions are squared off before the market’s closing, and there is no change in the ownership of the stock since it all takes place within a day.
Until the advent of online trading, intraday was something that only professional traders and financial firms took part in because of the high amount of risk and domain knowledge required to make profits. The criticality of intraday trading lies in understanding the market movements immensely and knowing when to invest and when to pull out. A trader’s strategy when doing online trading lies in making profits by taking advantage of the movements in the market, and the amount of profit earned depends entirely on the extent of fluctuations in the stocks available in the trader’s portfolio.
How to get the timing right for intraday trading?
There is no definite answer or a set theory to follow to answer this question, and there will never be.
When doing intraday trading, the one thing you cannot afford to go wrong with is the timing. And that comes only with an in-depth understanding of the market that ultimately helps maximise your efficiency. Even the most experienced traders are prone to losing money when they invest in the wrong stocks at the wrong time.
It is important to note that it remains highly volatile during the first hour when the stock market opens for trade due to the pile-up of the orders from the previous working day. Since, as per rule, all the previous day orders are executed first, it naturally spikes up the market’s volatility. Experts suggest that between 10.15 AM to 2.30 PM is the perfect time to conduct intraday trading. By that time, the morning rush subsides to some extent, and by the same logic, it makes sense to square off by 2:30, a little before the market closes, to avoid the exit rush.
When indulging in intraday trading, it is important to keep in mind to not rely too much on others’ advice and do your research and due diligence before stepping into it. If done right, it can give you good enough profits. Happy investing!