From experience, it is seen that shorter the time frame in investing, greater are the challenges. This is pertinent to intraday trading where numerous traders are looking to make a profit from intraday trading by spreading thin margins. However, they often end up losing it all.
At the end of the day, intraday trading is not a trading terminal, instead a reflector helping you introspect your behaviour while challenging the many emotions that come during the day. Let’s look at eight intraday tips that can help to enhance your intraday trading experience.
Keep aside emotions
If you were to reason, how often do you believe a reversal in trend could take place? Lesser than 10%? If the chances are so few, why do numerous traders continue to place a bet on trend reversals? Rather than contradicting the most significant force, that is the market, it can help to trade the trend. This is because the likelihood of success is rare and in the pursuit of wanting to catch the top/bottom, traders are often left with a substantial loss of capital.
Take advantage of stock volatility to tweak your stop losses
It is a given that all company stocks have a variety of characteristics. While some may have average fluctuations of 0.5% a day, others may range to 5% average volatility each day. It could be statistically unviable to trade stocks that have 5% volatility with a 1% stop loss. Moreover, the chances of traders being provoked are incredibly This is why it is vital to filter stocks that are aligned with your budget, or you could fine-tune your budget to a variable based on stock behaviour.
Controlling greed
Most traders are overcome with greed when they witness a tiny reversal in trend in a long-term trending company stock. For example, a stock that has been on the decline for a while may have witnessed a reversal of fortune for a few days. Some traders look to make a profit from such short-term retreats, and hence, become ensnared with bad quality stocks. You may want to stay away from such trading behaviour.
Losing small
As with many traders, every investor may have missed some amount of money in trading. The key here is to ensure that you lose small but gain big. However, poor money management leads to substantial losses in just a couple of trades.
Staying patient
By analyzing and studying stocks, you can make the right moves such as avoiding small profits or trailing stop losses to ride it to the farthest level. It is crucial to make the most out of the right trade.
The concept of pyramiding
Most traders average their losing trades, regarded as pyramiding. The better option is to go with inverse pyramiding. This means you can purchase a decent percentage at entry with a determined small stop loss and cut down your expenses by booking a few upwards. Once you are satisfied with it you may want to stay sustained with the rest of the amount until you have made the most out of the trend.
Some days you may have to wait it out
It is not essential to trade every single day. Knowing when not to trade can contribute immensely to your profit and loss. If you notice a series of confused movements and stop losses, these are signs that it is a bad day to trade and you may want to stay away from intraday trading.
Defining your exits
It is crucial to establish your exits before you begin a trading session. This can help make smart decisions and prevent irrational behaviour. Any loss beyond your defined exit point would not be logical or rational.