Learning intraday trading secrets and common tactics is best before getting into this trading style. Let us explain successful intraday trading strategies that include do’s and don’ts to help you trade successfully.
- Look for low volatility hours: Volatile markets may not favor day traders. Predicable market trends and momentum can support day traders.
- Set achievable profit targets: Day trading is not about daydreaming. Day trading can offer significant returns, but the success rate is meager. If a position has given you a 15-20% profit, it does not mean that you will set a high-profit target daily. Take positions with the hope of a reasonable and achievable profit target.
- Stop-loss is a must: Stop loss is required for most traders, and for intraday trading, it is an absolute must. A trade without stop losses may end up with unmanageable losses.
- Start Small: Day traders engage in multiple substantial-high volume trades. Day traders, especially beginners, must have a trading plan based on their budget and strategies. They need to be clingy to the assigned limit and trading plan. They can prefer to take small positions with a focus on stocks with great opportunities.
- Consider paper trading before you start trading: Intraday trading for beginners may be risky as it requires enough knowledge about the market. Paper trading enables them to identify the level of their understanding of the market and trades. They will come to know if they are ready to be engaged in day trading or not.
- Record your success and failures: Record your wins and losses to evaluate them daily may sound pedestrian, but extremely important. You can keep a tab of trades that went wrong and find the reason behind them. It will be really helpful to be a successful trader.
- Do not look for cheap shares like penny stocks: Low-priced stocks may attract most traders. Generally, these are the Penny stocks. Day traders should identify if it is a genuine opportunity or not. Perform thorough research before falling for penny stocks, or simply avoid them. You should open a demat account and trade with reputed brokers offering quality research reports to help you choose the right stocks.
- Do not play for uncalculated losses: Capital protection is a must in intraday trading also. You can determine how much losses you are willing to take per trade basis and set aside the funds accordingly to bear the losses. It is good not to take uncalculated risks.
- Do not trade with a huge margin: A margin trading facility with the brokers allows day traders to buy more shares than they actually have funds. You need to be very sure about your trade while using the margin facility based on your market analysis. It can magnify your losses more than that of profits on trade failure. You need to pay the interest on borrowed funds and bear the losses also. As a beginner, it is better to avoid margin trading.
- Do not fall for a trade due to fear and greed: Day trading does not have a place for emotions. You cannot take positions in greed or exit them due to fear. The market should be well analysed before deciding on a trade.
These tactics are common but necessary to be applied by every intraday trader. These common strategies help traders to increase the odds of success. You need to invest multiple daily hours in sharpening your trading skills over time. It is a good idea to pick two or three liquid stocks for beginners and understand exactly how day trading works. You can develop and implement your calculative strategies to make your trades rewarding. Keep increasing your knowledge about the market movements.
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