How to Do Intraday Trading Step by Step: A Complete Guide
Intraday trading is a dynamic form of stock market trading where positions are opened and closed within the same trading session. Unlike long-term investing, intraday trading aims to capitalize on short-term price movements. While it can be profitable, it also requires preparation, discipline, and a clear understanding of market mechanics.
This step-by-step guide explains how to do intraday trading effectively, from preparation to execution and risk management.
Step 1: Understand What Intraday Trading Is
Before you start trading, it is essential to understand the concept:
Definition: Buying and selling stocks within the same trading day, aiming for short-term gains.
Timeframe: Trades are opened and closed before market close to avoid overnight risk.
Goal: Profit from price fluctuations within the session.
Tools: Real-time stock charts, trading platforms, and market news.
Understanding the nature of intraday trading helps you set realistic expectations and avoid impulsive decisions.
Step 2: Choose the Right Brokerage Account
To trade intraday, you need a brokerage account with the following features:
Low intraday trading fees: Since you may execute multiple trades per day, lower transaction costs matter.
Fast execution: Real-time order execution reduces slippage.
Good charting tools: Access to intraday charts, technical indicators, and market depth.
Margin facility: Intraday traders often use leverage to enhance capital efficiency.
Ensure your broker is reliable and regulated, offering a platform you are comfortable with.
Step 3: Learn Basic Intraday Trading Concepts
Before trading, familiarize yourself with key concepts:
Support and Resistance: Levels where prices tend to stop falling or rising.
Trend: Direction of price movement (uptrend, downtrend, sideways).
Volume: Number of shares traded, indicating market interest.
Volatility: Measure of price fluctuations. Higher volatility means more opportunities but also higher risk.
Technical Indicators: Tools like Moving Averages, RSI, MACD, and Bollinger Bands help identify trends and reversals.
A solid understanding of these concepts is essential to make informed trading decisions.
Step 4: Pre-Market Preparation
Successful intraday trading begins before the market opens:
Scan for high-volume stocks: Stocks with high liquidity provide smoother entry and exit.
Identify news or events: Earnings reports, policy updates, or economic news can impact intraday prices.
Mark key levels: Note intraday support, resistance, and pivot points for potential trade setups.
Create a watchlist: Limit your focus to 5–10 stocks to avoid distraction.
Pre-market preparation sets the stage for disciplined trading.
Step 5: Develop an Intraday Trading Strategy
Choose a strategy that suits your style and market conditions. Common intraday strategies include:
1. Breakout Trading
Enter when price breaks above resistance or below support.
Requires confirmation with volume spikes.
2. Pullback Trading
Enter in the direction of the trend after a minor retracement.
Reduces risk compared to chasing a breakout.
3. Momentum Trading
Follow stocks showing strong directional moves.
Ride the trend until momentum fades.
4. Scalping
Execute multiple small trades to capture small price movements.
Requires fast execution and tight risk management.
Choose one or two strategies and stick to them to avoid confusion during fast-moving sessions.
Step 6: Execute Your Trades
When the market opens, follow these steps:
Wait for confirmation: Ensure your chosen setup is valid.
Enter with a plan: Know your entry price, target, and stop-loss before placing the trade.
Use appropriate lot size: Avoid overexposure by risking only a small portion of capital per trade.
Monitor the trade: Watch for momentum changes or sudden news impacting the stock.
Execution is about discipline, not speed. Avoid entering trades based on emotions or rumors.
Step 7: Risk Management
Intraday trading is high-risk. Protecting capital is more important than chasing profits:
Set stop-loss: Automatically exit a trade if the price moves against you.
Position sizing: Risk only 1–2% of your capital per trade.
Daily loss limit: Stop trading if losses exceed a set threshold.
Avoid over-leverage: Margin amplifies gains but also losses.
Effective risk management ensures survival in the market over the long term.
Step 8: Maintain Psychological Discipline
Emotions can ruin intraday trades. Successful traders control:
Fear of missing out (FOMO)
Greed for excessive gains
Panic during sudden reversals
Impatience to close trades too early or late
Follow your trading plan strictly and avoid impulsive decisions.
Step 9: Post-Market Analysis
After the market closes:
Review trades: Analyze winners and losers to identify patterns.
Evaluate strategy performance: Note which strategies worked and which didn’t.
Update watchlist: Adjust your stocks based on today’s performance.
Document learnings: Maintain a trading journal to track mistakes and improvements.
Regular review is key to improving consistency and skill over time.
Step 10: Keep Learning and Improving
Intraday trading is a skill that improves with practice and learning:
Study technical and fundamental analysis
Learn from experienced traders
Test strategies on demo accounts before using real money
Stay updated with market news and economic trends
Continuous learning helps traders adapt to changing market conditions.
Final Thoughts
Intraday trading offers exciting opportunities but requires preparation, discipline, and risk management. By following these steps:
Understand intraday trading concepts
Open the right brokerage account
Learn technical tools
Prepare a pre-market plan
Choose and follow a strategy
Execute trades carefully
Manage risk
Control emotions
Analyze post-market performance
Keep improving skills
…you can increase your chances of trading successfully and consistently.
Remember, intraday trading is not a get-rich-quick scheme. Patience, practice, and discipline are the keys to long-term success.