Intraday trading can help with your wealth creation goals. But a newbie may struggle to understand the many concepts associated with online share trading. When looking at intraday trading for beginners, new traders must first get their trading tools in place. To do that, one needs the help of a broker.
Why you need a broker
Individual traders are not permitted to trade directly on the share market. You have to do so through a broker registered with a stock exchange and has authorization from the Securities and Exchange Board of India (SEBI). The broker could be an individual or a company.
To start intraday trading or any other form of online share trading, you must open a demat account and a trading account with a brokerage firm. A demat account holds the stocks that you buy in digital form. Meanwhile, a trading account allows you to buy and sell financial instruments on the share market. During the account opening process, you will have to provide your PAN card or Aadhaar card, along with additional documents to complete the Know-Your-Customer (KYC) formalities.
Share trading: How it works
Let’s look at the basics of buying and selling financial instruments on the share market, including the broker’s role.
- Know your requirements: Start by assessing your financial needs and risk appetite. This will help you to choose an online share trading approach that works for you. For instance, if your risk tolerance is low, you may want to focus on long-term share investments. On the other hand, if you can stomach a little market volatility, you could try your hand at intraday trading.
- Create your strategy: Have you identified your trading objectives? Now start looking for company stocks that fit those goals. Read the annual and quarterly reports of these companies to assess their fundamentals. Charts and technical indicators can help you derive estimates of how the stocks might move. Once you have the data in place, set targets for each particular stock before making a trade.
- The time is right: Share traders aim to buy when stock prices are low and sell when they are high. But predicting these trends is never easy. To keep up with market tendencies, you must monitor the markets regularly. This may give you a sense of when the market is turning bearish or when stock prices are likely to rally. The information will help you to plan your entry and exit points in a better way.
- Inform your broker: When you decide your next trades’ particulars, communicate these to the broker. Mention the number of shares that you wish to trade as well as the price points. Want to set up a profit target or a stop loss? Provide the broker with those details as well. Traders nowadays can do it all online through the technology-backed trading platforms that brokers provide.
- Monitor your portfolio: Work on building your share portfolio gradually. Carry out regular assessments on different stock movements to decide whether to buy more of a particular stock or exit a trade. Most big brokers provide charting tools that offer views of your overall portfolio as well as of individual stocks and sectors.
As you can see, you do need a broker to start investing in the share market. But as a trader or investor, you are free to make your own decisions. Those who are new to online share trading may help to work with an experienced broker like Kotak Securities. Once you open an account with them, you gain instant access to a wide range of trading platforms and resources that enable you to carry out trades in real-time.