After being bored of delivery-trading, I decided to try something new. The discovery of day-trading and futures & options had led my enthu level sky-rocketing to dizzying heights. As such, I began to explore these two new segments. I am still trying to get a grip good enough to trade in the F&O segment. But day-trading turned out to be much easier.
As a rookie in this segment, I started out cautiously. When inflation started its upward journey, I would keep all my margin money unblocked on the day the inflation figures were announced. Knowing the direction in which inflation was headed, it was pretty easy to figure out the direction in which the market would move the next day. Given that inflation was a sensitive issue at that time, the markets reacted sharply to it. Hence I would pick up a stock from the real estate or the financial sector (as these gave the sharpest reaction), specially a stock with a high beta-value. At the time of squaring off my position, I invariably walked out with huge money. This continued for four straight weeks until the tide reversed and left me wounded. However, my previous outings were enough to cushion this impact and I still left with a pretty decent amount.
Another time when day-trading can be very useful is during the last hour of the market. On the days when the market has received a good drubbing, people will be buying shares during the last hour to square of their short positions. This leads to a slight recovery in the market. Again, the direction of movement during the last hour is known which can be easily used for our advantage.
These days I always look for opportunities where predicting the direction of the market is easy. And I use these cues to great effect with day-trading.
Day-trading is generally compared with guessing. But I feel its intelligent-guessing that matters and makes a difference. If done properly, there’s much more money to be made in it than the delivery based trading. Retail investors only have to move out from their shell and discover it.
P.S: Shorting is fraught with great risks. It’s up to you to decide whether you are willing to take the plunge.
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