Intraday trading can be profitable, but it requires a strategic approach. Check out this post to learn the seven golden rules to succeed in intraday trading. Discover tips for choosing the right stocks, managing risk, and setting realistic profit targets to achieve success in intraday trading.
To most retail traders intraday trading is attractive and exiting.
What is intraday trading?
Intraday trading in simple language means buying and selling or trading within the day itself. It is a high risk high-reward trading system.
In today’s thread, we want to explain some important rules of HOW TO BECOME A SUCCESSFUL
INTRADAY TRADER.
These guidelines going to be helpful to manage and maintain an intraday portfolio in reducing the potential risk to increase the overall returns.
So, let’s get started …
1. Deploy only 30% of your overall portfolio in intraday trading portfolio
If you have Rs.100000 capital in your portfolio, then you should put Rs.30000 into your intraday trading portfolio and rest Rs.70000 into your higher time frame portfolio.
Probably you may be confused now and may think other way to maintain single portfolio for all the trades.
Don’t worry, here is the answer to your confusion;
Trading is not a job or game you will find excitement on it rather take it as a business. So, from a business point of view this concept has a significant reality. The higher the frequency of trades the more emotions come on the way. So it is needed to reduce those emotions and reduce the impact on them. You have to keep your intraday trading portfolio smaller. Intraday trading can generate higher returns, it also can produce considerable risk as it involves shorter volatility due to insane profits and losses. But remember that you can change this ratio (70:30) according to your comfortability.
2. Having a complete trading strategy
You must have a complete trading strategy. It means that you should know exactly when to enter, manage, and exit your trades before you jump into the trade.
3. Risk Management
Risk management means that you know exactly how much money you are ready to lose before a trade. Don’t focus on the profit, always manage your risk in such a way that even a stop-loss will not damage your psychology. For this you need to know the following things.
- Where to put the stop loss.
- What is the maximum risk per trade.
- What will be the exact position size so that you don’t lose more than your risk limit if stop-loss is hit.
There are a great saying: - “If you manage your risk, your profits will take care of itself. If you don’t, your parents will take care of you”.
It is advisable not to take more than 2-3 % risk per trade (of your trading capital)
4. Say ‘NO’ To Revenge Trade
Sometimes traders take unnecessary trades with an intention to make quick gains and suffer huge losses. These losses hit their ego and they are not ready to accept their wrong trades. So, they tend to take more trades and ultimately face big blow to their trading capital. Revenge trading is the most dangerous thing to destroy your capital. Always respect the market and focus on your plan.
5. Focus on the overall trend of the market
As a day trader you should have a clear concept of overall market trend. First identify the overall market trend in higher timeframe, then shift to lower time frame for taking trades. It is always better to go with the trend not against the trend. It will increase your profit potential significantly. Trend is your friend.
6. Don’t trade with borrowed money
Trading is the most tough mental game. If you want to indulge in this game your psychology must be at the peak form. But if you trade with borrowed money there must be some negative effects that will hit your mindset. Borrowed money means that amount of money which you don’t want to lose. So when you trade with the money which you don’t want to lose you will automatically take wrong trading decisions. So what are the probable things you will do?
- You shift your stop-loss when the trade goes against you.
- You capture small profits thinking that if the trades turn into losers.
- You average your losing trades hoping for a bounce and recover the losses. Eventually you will blow up all the capital and you will be in a debt so don’t borrow money to trade.
Market is dynamic and always changing. Change is the rule of nature as well, it also applies to market. Market does not know who you are. Go with the market and respect it, then market will look after you. Don’t fight with the market when you don’t get opportunities to trade. There may be some bad phases in the market and that can hit a trader’s psychology anytime. It is always better to stay away from the market during that time and spend time with family or engage yourself in other works.
Market will be there forever, we can get chances to trade and make profits if we focus on discipline and learning.
That’s all! We hope this thread will be helpful. If found informative please share with your friends.
Frequently Asked Question (FAQs):
1.
What is Intraday Trading?
Intraday trading
involves buying and selling stocks within the same trading day. Traders aim to
profit from short-term price fluctuations by closing all positions before the
market closes. For doing Intraday trading traders need to watch the chart on 15
minutes, 30 minutes, and 1 hour or even on 5 minutes chart.
2.
How much Capital do I need to Start Intraday Trading?
The required
capital depends on the broker and the leverage offered. While you can start
with a small amount, it's advisable to have enough capital to manage risks
effectively. You can start with as little as Rs.5000 as long, but it is
advisable to start with minimum Rs. 50000 to make proper trade management to be
safe from risks.
3. What
is the most Important Rule for Intraday Trading?
One of the most
important rules is to set a stop-loss for every trade. This helps protect your
capital by limiting potential losses if the market moves against your position.
And the final rule is to follow the first rule consistently in every
trade.
4. How
much Profit can I Expect from Intraday Trading?
There’s no fixed
profit amount. Your earnings depend on market conditions, your strategy, and
risk management. However, aiming for consistent, smaller profits is a smarter
approach than chasing big gains. As per good risk-reward trade always try to
maintain a 1:2 ratio profit target, otherwise you won't be profitable at the
end.
5. Can I Trade every Stock for Intraday?
No, not every
stock is ideal for intraday trading. It’s best to choose highly liquid and
volatile stocks that experience price movements throughout the day to
capitalize on short-term trends.
6. Is Technical Analysis Necessary for Intraday Trading?
Yes, technical
analysis is crucial for intraday trading. It helps you understand price
patterns, identify trends, and make informed decisions about entry and exit
points.
7. How
do I Control my Emotions During Intraday Trading?
To manage
emotions, stick to your trading plan, avoid overtrading, and accept that losses
are part of the process. Practicing discipline and patience can help you stay
calm under pressure. For this you have to cultivate making a strong psychology
which is the most important aspect of intraday trading.
8. How
many Trades should I Make in a Day?
There’s no set
number, but it’s better to focus on quality rather than quantity. Take fewer,
well-analyzed trades rather than multiple high-risk trades to avoid
overtrading. Fewer trades help you save expenses and keep your mind free from
unnecessary stress.
Disclaimer: The information provided on MoneyWiseMind is for educational and informational purposes only. It is not intended to be financial advice, and you should not rely on it as such. Before making any financial decisions, you should consult a licensed financial advisor.
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