Intraday Trading is a complex and dangerous game. It involves more than just making the appropriate deals and logging gains. In reality, it’s more about controlling risks and paying attention to the present state of the market. Even with their attention to detail and risk management, traders make critical errors that result in large losses. In intraday trading, about 90% of traders lose money after making only one error. These faults that traders should avoid while trading intraday are listed below.
Using tips Instead of studying market
Getting effective intraday trading tips from traders is relatively straightforward, but profiting from these suggestions is more difficult. Learning to trade on your own is the greatest approach to make money in intraday trading.
Receiving trading advice from seasoned professionals may or may not result in a profit. A trader has to get knowledgeable about charts, comprehend their structure, and develop their autonomous trading skills. Many intraday traders lose patience and stop trading intraday when they don’t take this risk.
Trading in Illiquid Stocks
Due to a deficiency of research, day traders frequently make the greatest mistake of all trading in illiquid equities. They have to realize how important stock liquidity is to intraday trading.
Let’s clarify with the following example:
Consider a scenario in which a trader purchases a certain stock early in the morning with the intention of selling it before the market closes at a profit, but in the end, the stock is left with no purchasers. This may result in the stock being sent to you in the trader’s Demat account and their sell order not being executed.
Not understanding the Whole Market
It’s not as easy as it may seem for many intraday traders to follow the trend and ride it out to the end of the closing day. For the intraday trader to understand the subtleties of the trade structure, they must thoroughly analyze the stock performance as fundamental investors.
Ignoring the Trading Plan
The two most important items intraday traders overlook are the trading plan and the trading journal. First, let’s examine the trading plan. The trading strategy summarizes and provides guidance on how intraday deals should be thought out and carried out. This includes setting goals for profits, stopping losses, and choosing the right times to trade.
A trading strategy is a comprehensive guide to trading that a trader must follow religiously.
The trading journal, on the other hand, keeps track of every deal that takes place in a single trading day, along with the reasoning and the EOD performance analysis.
Not Setting the Stop Loss
The primary purpose of stop-loss is to protect traders from large losses. Because stop-loss offers traders a sense of how much loss they can afford to incur, many intraday traders employ it.
With a stop-loss order, the trader gives the broker instructions to sell the stock as quickly as possible if, throughout the trading day, the market drops below a pre-established price.
This order is executed right away in the event of a market decline, protecting a trader from losses. Due to their high tolerance for risk, day traders aim to increase their profits.
As a result, when they book a purchase order, they neglect to set a stop-loss order. As day traders, they have to consider how to increase their profit while avoiding big losses.
Recall that putting in a stop-loss order is quick and can rescue all of their possible money in the event that the market declines.
Avoiding Technical Analysis
When trading stocks, the term “surety” does not exist. The greatest thing a trader can do, though, is research and evaluate a stock’s or company’s historical performance and make judgements based on that information.
Both novice and seasoned traders start their trading careers with this stage. In trading, examining the stocks and their past performance is essential.
To make wise selections, a trader’s job includes examining the price, volume charts, and several other technical indicators.
These indicators aid traders in determining if and how long the stock will continue to follow the current trend.
As everyone knows, markets have the power to quickly shift circumstances. The safest strategy an intraday trader can employ, nevertheless, is to master technical indications and current trends. The most common error made by intraday traders is selecting equities for trading too quickly. Always take your time and select the appropriate stock while trading.
Conclusion
Day trading has a high risk-to-reward ratio, and many traders take advantage of this to increase their profits. A common error in intraday trading is traders expecting profits quickly and exhibiting impatience. Technical analysts should conduct research and make trading decisions based on their conclusions. To learn more about the greatest strategies and tips for intraday trading do follow BlinkX the best trading app for beginners.