Day Trading- Tips For Small Individual Traders

hope these tips benefits newbies like me..
-Riz

thanx for giving guidance but could u tell me how to select the stocks for the intraday trading or guide line to select stock for intraday. thanx

choose based on fundamentals. buy stocks which are profitable this quarter.

don't buy tech and sugar stocks this year! sugar stocks are a big trap.

here's how i do my choosing:

1. it should be nifty or junior nifty or best midcap stock (market cap should be in 100 crores)
2. it should be profitable this year
3. it should be around 52weeks average (52weeks high + 52weeks low /2)
4. it should trade above 52weeks average.
5. the volume should be above 1 crore traded shares
6. the price should be under 150
7. observe the stock's trading range for a week (open, high, close - trading range)
8. see historical price movement using daily and weekly charts (www.aptistock.com or using nseindia.com)
9. actually observe the open-low difference and open-high difference daily..

10. you can get the stoploss with open-low difference and resistance using open-high difference.
11. price also governs the high low, a small stock of 20 rs will move around 30ps - 50ps either ways, 50 rs, 50ps-1re, 100rs stock - 1re-3re, 150 stock-3rs-5rs.
12. observe the weekly trend, if it is moving up then then buy and hold (if you prefer taking delivery)
13. if going long - buying then selling, buy only positive + stocks whose today's open and current price is above previous close.
14. if going short - selling then covering, seel only - stocks whose today's open and current is lower than previous close and trending downwards.
15. small price stocks say 40-60 rupees stock, behave differently than 100 or 200rs stock.
16. banned stocks in f&o provides range where you can be comfortable. see nseindia.com for banned stocks.
17. and finally use pivots for intraday trades.
18. try to enter on day's low or previous close. and put a stop loss a percent down.

good luck.

trap for a day? why do you talk from an investor's mindset in day trading? sugar stocks can give you big return in day trades.

yes, my bad. actually i do swing trading and day trading. got messed up

yes for day trading, any stock will do.. but a "no" stop means generous contribution to the market

thanks bro....

Dear rizwaan,

Thanks for your great tips. It will really help me.
I am new here.. Can you tell me how to use Stop Loss with an example.
If you can pick IFCI for your referene then it will great.. Please provide 2 example one in long (buy then sell) another in short (sell then buy)


I have booked a big loss yesterday. I am not using stop loss. don't know how to use..

Thanks and regards,
Mukund Ranjan

Hi,
Stop loss is used to minimise ur loss upto that extent.
suppose u bought 100 shares of X company @ RS.100 & thinking that it will go to 115 by the day but in case u r wrong & prices move in back direction & u r not ready to pay a loss more than Rs 5 on 1 share then u hav 2 place an stop loss sell order like this
Trigger price--95
Limit price--90
as soon as the LTD will reach of company X to Rs 95, your stop loss order will be activated & ur buy position will be sold at any available price between 90-95, so here your maximus loss=10*100=Rs. 1000

suppose u r not using stop loss sell order & at the time of sattlement the price of sahre becomes 70 & there is no other way ( except squarring off ur position @ 70)
then ur loss=30*100=Rs. 3000

Same thing is applicable in shorting of shares, if u r holding a short (sell) position then u should protect ur capital & minimise ur losses by putting a stop loss buy order.

Regards,
Sumit

Dear Mukund,

First of all, be brave my friend, losses are part of trading. My prayers for you. And we enter any trade to profit from it, not just to do the trading. it is entertainment for many but for traders it's just serious business. Trade for profit only.. Protect your money, now! get profits later!

always, decide in advance before doing the trade:

1. What is my entry point? (day open, pervious close, day's high?) (i would say, previous close or pivot support1 as entry)
2. What's my Exit point? (Day high, or any thing above buy_price+brokerage? i.e., breakeven or 0.5% or 1%)
3. what's the worst loss i am willing to take to save my money? that's your stop loss. (0.5%, 1%, 1.5%, 2%, 2.5% or 3% or more?)

see it as if you have 100 rupees, and a bandit has caught you, how much bribe will you give to to save your money 100 - (minus) bribe ;-) 1% 2% 3% or more? (2% is more than enough)

it would be prudent to use pivot point support2 as your stoploss, as soon as the trade moves into your favor say, breakeven price, then modify your stoploss to the breakeven price.


How to put a stoploss?, I use reliancemony, so, i don't know about others..

Stoploss Orders are of 2 types
1. Stoploss Sell order - when you have sell positoin open (you're bought)
2. Stoploss Buy order - when you have buy position open (you've shorted)

1.Stoploss Sell - when you are long (bought and want to sell out in advese move)

1. enter scripname [ ifcieq ]
2. enter ordertype - [stoploss]
3. enter produce - [margin] (or delivery or atst/btst)
4. enter limit price - the price for squareoff

Example with ifci:

Ifci has 10-12rs volatility. so normally you can have 11rs stoploss to save your money.

ifci open: 98 (on 20 december 2007)
ifci high: 98
ifci low: 71

if i were to trade into ifci, i would

1. observe, the trend of ifci,
2. are the buy qty increasing or decreasing
3. general sensex and nse movement up or down
4. normally ifci would rise/fall 10-12 rupees from open
5. even if i go long in ifci at 98-10 = 88 ( cause it is negative today)
6. i would place stop at 85 (2.5% more room from the normal 12 rupee movement)


+1000@88 = 88000 (bought)
-1000@85 = 85000 (got stoploss triggered)
= -3000 loss but still saved many thousands.

it is better not to get the order filled up, than to lose money afterwards due to a bad entry point.

Okay, to put the stoploss sell order at 85, we would do:

1. Scrip name: ifcieq
2. Product: margin
3. Quantity: 1000
4. Ordertype: stoploss
5. Order: Sell
6. Trigger price: 85 (as soon as it reaches 85, the next line's order is sent to nse/bse exchange)
5. Limit price: 84 (you can set trigger and limit both to 85)
6. click ok.

we should put the stoploss order first, to save ourselves from high volatility. then enter the buy order.

and suppose, your stoploss is not triggered, and price reaches 90 just go to orderbook and modify it with 89, at least you'll get out with negligible loss or breakeven.

don't use sell order to squareoff, but slowly, slowly increase your trailing stop (stoploss when in profit is called trailing stop)

practice it with just 1 quantity. till you become comfortable with stoplosses.

Good luck and best wishes!

@Sumit, Thanks buddy..

@Rizwan.. I have no words to say you thanks... You are awesome man..
you are a master.. Thanks for such a detailed explanation..

Even though I am loosing my money daily.. But I am sure I will be a good trader on day..