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Intraday analysis is done using the Top Down Approach.
The process of identifying the momentum stock in Intraday is as follows :-
1. Identify the Market Direction i.e, whether the market is +ve or -ve.
2. Check Market Breadth (Advance / Decline)
3. Check sector contribution that is weighing for the market direction.
4. Check the Index contribution for the current prevailing market direction.
5. Take top two sectors that is the major contributor for the prevailing market direction.
6. Now Filter top 4 stocks from the filtered sectors.
7. Again filter the stocks that is trading with the high volume.
Now we have narrowed down with the stocks that are hot to trade in the Intraday market, we are now ready to execute the trade and we need to make sure that the trade is executed along with the trend of the market.
Buy and sell the stock in uptrend market condition and Sell and buy the stock in a downtrend market.
Intraday price movement is witnessed mainly due to market sentiment and analysis is done using the top down approach.
Positional analysis is done considering several other factors to predict the price movement of a stock, the analysis method followed here is the bottom up approach. The stock is selected and chart is plotted by taking various data and the price movement is predicted. These may or may not work for a particular day where the sentiment prevailing in the market might be different when compared with the stock that we have analyzed, so it is not advisable to use positional analysis for Intraday even-though sometimes it might be right as well.
In Intraday the analysis is done to to predict the target price that has to be achieved in the same day, whereas in positional analysis we expect the price movement to happen over a period of time i.e, a week or month.
In Intraday we need to trade along with the trend of the prevailing market.
Intraday price movement is driven by the market sentiment and the global market plays a major role to decide the market trend /movement of our market on a given day.
Indian market that opens at 9 am IST depends upon the prevailing market condition of its Asian peers like, Hongkong market, Singapore market etc., which would have opened taking the cue from the closing of US market. We can also see some change in the market trend in the Indian market after the open of European markets at 1.30 pm IST.
he IDEAL time for trading Intraday would be between 10 am to 11.30 am in the morning and between 1.30 pm to 2.45 pm in the afternoon.
As a disciplined trader if a trade has been executed with the perspective of closing it on the same day it should be religiously followed and the trade should be closed on the same day before the close of the market even if it ends in a loss.
In some cases the Intraday trader uses the margin amount provided by the brokers to trade in the market, any transaction that is done using the margin amount has to be closed before the close of the market.
In Intraday trading any short position created has to be exited or bought back before the close of the same day.
In a scenario where the stock is bought in the intention of closing it on the same day with sufficient fund in the account it is not mandate to exit the trade even the intention of buying the stock was for Intraday position, however in scenario’s like using brokers margin amount or creating a short position it is mandate to close / exit the position.
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