Intraday trading fascinates traders all through the years. Many manage to make fortune, while others loose during intraday trading. Even the thought of intraday trade scares every trader. Individuals are terrified by horrifying stories of investors losing 50% of the portfolio value. Our guide to 15 powerful tips to intraday trading help novice traders to adroit the skills to earn profits.
Below, preview the insanely powerful rules to follow when investing in intraday trade. These rules will maximize the probability to earn profits and reduce risk to loose
15 Must-Follow Rules for Intraday Trading
Thousands of traders invest in intraday to earn profits. Employing unique trading strategies is essential to every trader. 15 simple sets of rules one should follow to trade confidently in intraday markets. Rules are based on human psychology and have nothing to do with Technical and Fundamental Analysis.
Let’s get started with the 15 Powerful Rules to Intraday Trading for Beginners.
Rule 1: Invest in Knowledge to Drive Progress in Right Direction
Trading in Intraday is risky as the market is highly volatile. But one can act smartly to earn some quick bucks. Intraday trading is different from regular trading. Traders need to have a practical approach. Emotional factors add up in earning from intraday trading.
If you are planning to earn profits in the shortest time possible, then it is crucial to learn that there is no shortcut. You need to research before intraday investing. Moreover, intraday trading cannot help you become rich overnight.
Many stock market leaner start day trading with an assumption to earn profitable trades. Which is nonviable and not real? Learning the stock market and intraday trading strategies is the key to smart investing. Day traders need to invest in learning the stock market. Thus, make well-informed trading decisions.
Rule 2: Employ best Trading Strategy
Investing strategies is the core of a trade. Always follow a specific trading strategy that suits your risk tolerance or schedule. Subsequently, you can use Uni-Directional Trading Strategies to generate a significant return. UDTS comprise of 9 trading strategies based on the technological analysis. The trading strategies mechanism of simplistic strategies for day traders, position traders, futures, and options.
Adopting a flexible trading strategy facilitate traders to make a better position to pick stocks. Without the need to incur the expense of changing course
Rule 3: Practice Paper Trade On the Strategy for 9 Days to Make New Resultant
Putting your money at risk is not a healthy day trading practice. Day trading beginners must practice trading strategies on paper trading before investing in real-time. You must know
- Find good trades
- Enter orders correctly
- Manage winning trades
- Cut losses
When starting with stock market investing, you want to see the effects. Before investing with real-money, test with paper trading. You can benefit from doing real trades before start using real money. Because the stock market for beginners is scary. And using real money in simulated trading gives you the opportunity to watch the markets. Thus, see how your trades would theoretically perform in real-time.
Furthermore, perform paper-trading for 9 days to get initial experience. Consider the net resultant of 9 days before using in the live market. Test new strategies and set up with a small amount of risk on each trade.
Rule 4: Preparation for Day Trading and Stock Selection For Intraday Trading
Many stock market traders fail simply because they rush in without homework. Trading is a professional Endeavour. There is no easy money. Before the market opens, prepare you by selecting stocks. Some questions you need to ask a fortnight are:
- Performance of overseas stock market
- Performance of index futures in pre-market
- Economic or earnings data is due out and when
Whatever trading strategy you use, label major and minor support and resistance levels of shortlisted stocks. Set alerts for entry and exit signals. Remember preparation can make a difference to performance.
Rules 5: Develop a Trading Psychology and Self-Discipline
Exercising trading discipline is a key money-making technique. A successful day trader possesses several skills. The ability to determine the stock price direction and the companies fundamental are two of them. But none of these two technical skills is as important as novice trader mindset.
The psychological trading aspect is utmost important. Day traders intend to think and reach fact to make quick decisions. Moreover, sticking to their trading strategy is widely considered to win.
Rule 6: Risk Only What You Can Afford To Lose
Intraday trading is risky. There is a high chance to lose money. As a beginner to day trading set aside a surplus amount of funds that you can trade. This will ensure that you do not exceed the limit to investing. Setting yourself a trading budget is the best way to limit your investing.
Always remember, losing money is traumatic. Using opulence is a virtue of putting hard-earn money at risk. For instance, if you have a budget of Rs. 10,000/- try to use only that money and don’t exceed that limit in any case.
Rule 7: Do not Allocate 15% of your Total Amount on Single Trade
Allocating 15% to single trade is a general concept. Even though it’s called ‘rule’. Never allocate more than the amount you can afford to lose. The rule is important as it underlines the fact – not all trades will be successful.
It doesn’t mean that 85% of your trade will result in a loss. It just means that you shouldn’t expect to reap significant profits from every trade you make.
For instance, your trading budget is 1 lakh, and then your single trade should be limited to Rs. 15,000 only.
Rules 8: Invest in at least 6 Trades both Buy and Sell
As day trading beginners, it is available to focus on buying 6 trades of both buy and sell. With few stocks, tracking and evaluating opportunities is easier. If you trade in a large number of stocks, you may miss out on chances to exit at the right time. However, it is not important to trade in propionate number of buy or sell trades. By taking both buy and sell trades in Intraday, it reduces your risk.
Rule 9: Quantity Should Be Less If Stoploss is more than 1.5%
A stop loss is a predetermined amount of risk a trader is willing to accept with a single trade. Always keep the quantity less if the stop loss is 1.5% away from CMP. If it is more than 1.5% then you can increase the quantity.
This rule help trader to limit theory expertise during a trade. Using a stop loss can take some trading emotion out. Ignoring stop loss is bad practice. Thus, protective stop loss ensures both loss and risk are limited.
Rule 10: Exit your trade once Stop Loss is hit
Knowing when to stop trading can be tricky for an emotional trader. An ineffective trader is one who is unable to follow a trading plan.
Always exit from trade if it reaches stop loss. This is important to exit at stop loss from the fast-moving market where stock prices can change rapidly.
Rule 11 & 12: Caution When Stock Gap Up/ Down or Event Day
Take precaution when intraday trading stocks open with Gap Up or Gap Down, in such cases
Your stop-loss price and CMP has huge difference and if the stop-loss is hit then you may suffer huge losses. So avoid stocks to trade in intraday which has Gap openings and even on any big event day
Rule 13: Treat Intraday Trading Like a Full-time Job
Intraday trading is a full-time business. It requires complete attention. In order to be a successful day trader, one must approach trading as a full-time business. And not a hobby or a part-time job.
As a part-time job, intraday trading is no real commitment to learning. Besides, can get expensive trading. As a full-time job, ensure you research and develop trading strategies to maximize business potential. Intraday trading is paragon from 9:00 am to 3:30 pm.
Rule 14: Intraday Trading is bunch of trades so focus on bunch resultant
Intraday trading is a game of probability and by choosing more than 5-6 trades of both buying and selling, increases our probability to win. So don’t put all your efforts and money on a single trade of single side.
Rule 15: Don’t Carry Your Losses to Next Day
An intraday trader should always be beware of overnight risk. The key here is to stick to knitting. Carrying positions overnight runs the chance of losing money. Thereby, your trade may not be equipped to bear the cost.
However, you can carry the profit trade to the next day, but not losses.
Checklist Intraday Trading Strategies for Beginners
Why 15 Rules to Intraday Trading Can Benefit?
Intraday trading offers huge earning opportunities. Getting along with the 16 rules to intraday trading will novice traders to
- Identify the right stocks for intraday trading.
- Isolate the current market trend form surrounding noise
- Capitalize on the market trend
- Characterize the best intraday trading stocks
- Analyze right entry and exit strategy
- Study trendlines and charting price waves
To conclude, there are countless intraday trading strategies which can be ghastly for beginners. Abovementioned, 16 intraday trading strategies proven to be safe to save your money.
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