Most of us love the lure of intraday trading. You enter into a position in the morning and take home the profits by end of day. You do not have to worry about demat and delivery and you can take positions which are a multiple of the funds you have. Unfortunately, intraday trading is not such a simple game as it is made out to be. You need to learn intraday trading secrets before getting into the act of intraday trading. So, what are the intraday trading tricks for good returns? Let us look at 10 such successful intraday trading strategies. More that specific strategies, they are the 10 rules that can help you trade successfully intraday.
10 Trading rules to become a successful intraday trader -
1. Intraday trading is all about protecting capital. First focus on how much loss you are willing to take overall and on a per trade basis. Once you can protect your capital from depleting beyond a point, intraday profits will automatically follow.
2. Never trade intraday without a stop loss. Remember, stop losses are required in most trades but in intraday trading it is an absolute must. In the absence of stop losses you may end up holding positions with unmanageable MTM losses.
3. Always decide your profit target based on our risk-return trade off. Stop loss is one side of the story; the other side is you also need to take profits. Let your profit targets be a multiple of your stop loss. A trade-off of 3:1 or 2:1 is understandable, not 1:1.
4. Avoid the lure of tips and only trade when you are convinced. There is no shortage of research analysts and market experts. Most of them are just pretenders to the throne. Treat these ideas with a pinch of salt. There is no alternative to doing your own research before trading intraday. That works best at all times.
5. Staying away from markets is also an important decision for intraday traders. As an intraday trader there are 3 key decisions you make; when to buy, when to sell and when to sit tight. Interestingly, most of the money in intraday trading is actually made when you sit out doing nothing while the rest
6. Don’t trade in the midst of a volatile market. That is the cardinal rule. Intraday trading is best done when the direction and momentum of the market is predictable. Otherwise you could end up spending more time triggering stop losses.
7.Never try to recover your losses through over trading. This is a golden rule of intraday trading. Quite often if you buy and the stop loss gets triggered, the tendency is short double the position. This overtrading will lead you to lose money both ways.
8. If you are an intraday trader, beware the overnight risk. If you are intraday trader, stick to your knitting. Carrying positions overnight runs the overnight risk and your intraday trader capital may not be equipped to take that kind of risk. Be cautious.
9. Don’t rue over losses, they are part and parcel of intraday trading. It is good to look back and analyze why you made losses. But don’t lose sleep over the losses you made on a day. These are part and parcel of your trading activity. Take it in your stride.
10. Never panic when you are trading intraday. When you panic you subsidize the other trader who does not panic. Also, panic forces you take hasty and wrong decisions in the market which you are forced to regret at leisure.
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