20 things you need to remember when you trade intraday
Most of us love the lure of intraday trading. You enter into a position in the morning and take home the profits by the end of the day. You do not have to worry about Demat and delivery and you can take positions which are a multiple of the funds you have. Unfortunately, intraday trading is not such a simple game as it is made out to be. You need to learn intraday trading secrets before getting into the act of intraday trading. So, what are the intraday trading tricks for good returns? Let us look at 20 such successful intraday trading strategies. More than specific strategies, they are the 20 rules that can help you trade successfully intraday..
20 Trading rules to become a successful intraday trader.
1. Don’t trade within the midst of a risky market. That is the cardinal rule. Intraday buying and selling are greatest carried out when the path and momentum of the market are predictable. Otherwise, you may find yourself spending extra time triggering cease losses.
2. Intraday trading is all about protecting capital. First, focus on how much loss you are willing to take overall and on a per-trade basis. Once you can protect your capital from depleting beyond a point, intraday profits will automatically follow.
3. Never trade intraday and not using a cease loss. Remember, cease losses are required in most trades however in intraday buying and selling, it’s an absolute should. In the absence of cease losses, you might find yourself holding positions with unmanageable MTM losses.
How many times we can trade-in intraday
4. Always decide your profit target based on our risk-return trade-off. Stop-loss is one side of the story; the other side is you also need to take profits. Let your profit targets be a multiple of your stop loss. A trade-off of 3:1 or 2:1 is understandable, not 1:1.
5. Don’t stretch your self on the margin of buying and selling. When you leverage your self on margins control your worst-case loss. Don’t stretch your self to a degree that your losses grow to be unaffordable within the occasion of any black swan occurrences.
6. Avoid the lure of tips and only trade when you are convinced. There is no shortage of research analysts and market experts. Most of them are just pretenders to the throne. Treat these ideas with a pinch of salt. There is no alternative to doing your own research before trading intraday. That works best at all times!
Intraday Trade Tips
7. Staying away from markets is also an important decision for intraday traders. As an intraday trader, there are 3 key decisions you make; when to buy, when to sell and when to sit tight. Interestingly, most of the money in intraday trading is actually made when you sit out doing nothing while the rest of the market is burning profits in the chaos.
8. Record your wins and your losses and evaluate them at the end of the day. This may sound pedestrian and clerical but extremely important. Keep a tab of trades that went wrong and those that went right. Keep a scrapbook to analyze what you did wrong and what you could have done better. It will really help you in becoming a better trader.
Intraday Trade Strategy
9. Averaging your trades is the cardinal sin in intraday trading. It is quite common to buy more of a stock when it corrects. Averaging is wrong for two reasons.
Firstly, you are running the risk of being wrong twice.
Secondly, you might increase your exposure to a particular stock more than warranted.
That could also put your capital at greater risk.
- It’s much more organized.
- Keep a tab on information and on macros.
- Evaluate the circulation of company actions and outcomes bulletins.
All these are helpful inputs if you need to be a knowledgeable intraday dealer.
10. Keep a tab on the information; in any other case, you are doubtless to fail as an intraday dealer. Intraday buying and selling are just not about punting within the markets;
11. Know the businesses you are buying and selling, their enterprise, technical ranges, and many others.
That is just not just for elementary analysts. Even intraday merchants need to have a cling of what the corporate is doing and the way it’s performing.
12. Learn to catch momentum and study to consider F&O knowledge.
- Intraday buying and selling are all about being on the fitting aspect of momentum.
F&O knowledge factors like open curiosity, choice strike accumulation, IVs; Put Call Ratios are all essential indicators for intraday buying and selling.
13. Never panic when you are buying and selling intraday. When you panic you subsidize the opposite dealer who doesn’t panic. Also, panic forces you take hasty and incorrect selections available in the market which you are compelled to remorse at leisure.
14. Don’t rue over losses, they are part and parcel of intraday trading. It is good to look back and analyze why you made losses. But don’t lose sleep over the losses you made on a day. These are part and parcel of your trading activity. Take it in your stride.
15. If you are an intraday trader, beware of the overnight risk. If you are an intraday trader, stick to your knitting. Carrying positions overnight runs the overnight risk and your intraday trader capital may not be equipped to take that kind of risk. Be cautious.
16. There is nothing like a free lunch in intraday trading.
- Don’t get carried because you earned handsome profits on a single day.
- Markets have the dirty capacity to hit you when you least expect it.
- Return is a function of risk and there is nothing like easy money.
17. If something is too good to be true then it is probably not true.
- This is especially true if your position has yielded attractive profits within an hour.
- Don’t try to run your luck for long.
If something is too good to be true, just take your profits and walk out.
18. Don’t waste your time with inventory highs and lows; they don’t matter.
- Whether you are an intraday dealer or an investor;
- No one has constantly caught market tops and bottoms.
- It is just not solely unattainable but in addition meaningless.
The incremental profit is proscribed so don’t obsess your self with shopping for on the backside and promoting on the prime.
Better your losses by way of over-trading
19. Never attempt to get better your losses by way of over-trading.
- This is a golden rule of intraday buying and selling.
- Quite typically if you purchase and the cease loss will get triggered, the tendency is brief double the place.
This overtrading will lead you to lose cash each method.
20. There isn’t any golden rule and solely apply makes you an intraday dealer.
Finally, the golden rule of intraday buying and selling is that there isn’t any golden rule.
It is actually an exercise that requires self-discipline and threat administration and can solely be perfected over time.
That applies to intraday buying and selling as properly.