Avoid these intraday trading mistakes to succeed

intraday trading mistakes

Intraday trading or day trade involves buying and selling within the same trading session. That makes it harder for the traders to protect their investment and achieve profits. 

One cannot predict that if he will be making a profit or loss for the day but one can assure that probability of gaining is more than losing if following the right approach. So in this article, we will spotlight some trading blunders and intraday trading mistakes that many people perform.

These intraday trading mistakes will work as a lesson for many newbies or experts who are going after the wrong practice while day trading.

Avoid these intraday trading mistakes to succeed

There is no such strategy or practice in intraday trading that guarantees success. The success is backed by reading technicals and following the right approach without mistakes. Given below are the top 5 intraday trading mistakes that are to be avoided for success in the stock market:

Entering trade without clear thoughts 

There are many traders who initiate their trading day without following a specific trading style. A trading style is very essential for successful intraday trading because if you are entering and exiting in a defined manner then you are likely to make profits. Working without style is just like driving a car in an unknown region without a map. Yes, there is some possibility that you would reach the right destination but more are the chances that due to no directions you are wandered. 

Before entering the trader, familiarize yourself with the movement of the stock or financial assets you want to trade in. After that build the complete strategy by assuming predefined targets, stoploss, and ideal price entry for certainness.

Not applying Stoploss 

This is one of the common intraday trading mistakes that is done by many traders. The main psychology behind not applying stoploss is fair of booking a loss. But, people don't understand that stoploss is crucial to prevent big losing. 

Let us sense with help of an example: You took a position for 1000 shares at a price of Rs.100 per piece, target rate at Rs.108, and placed a stoploss (SL) at Rs. 97. Due to some of the reasons the stock doesn't move as per your expectations and started declining from your average price. All of a sudden it hits the stoploss placed by you, now you have booked a loss of Rs. 3000. After, termination of the trading session you found that the current market price of the stock is Rs. 93. 

Now, you should realize the importance of stoploss in protecting your invested money. As you have now saved Rs.4000 by booking a small loss at the right time by putting a stoploss.

Relying on trading tips and advice

Relying on trading tips and advice that are circulated by the news and social media channels is not a great strategy. It builds your dependence on those free recommendations and restricts you from doing your own research about stocks.

Doing this will impact your learnings from the trades because you are buying/selling without pushing your mind. If one day you might not get awareness about which stocks or derivatives to trade then you will end up in big trouble in choosing an ideal one. Instead, you can check out news and brokerage advice for getting the day's perspective but should perform your own research by reading charts, technicals, and day facts.

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Choosing a low volume trade 

There are hundreds of penny stocks or small-cap companies listed on the stock market that attracts a very low trading volume. The volumes are low just because people are not willing to trade or invest much in such petty stocks as they involve a high degree of risk. Being an intraday trader you should never trade a less volume stock because at the end of the day it becomes really hard for the users to exit by clearing their positions at an ideal price. 

Example: You bought 1,000 shares of a company that is priced at Rs.25/share and the price also reached an attractive price of Rs. 27/share during the day. You decided to book profit by exiting the trade but found out that there are not many buyers or few buyers who are willing to buy with an asking price of Rs. 25.5, Rs.25, and below. Since being an intraday trader you have to exit and might not be able to book the expected profit because of low volumes in that illiquid stock.

Being impatient while trading 

Patience is the key to handsome profits. Taking a trade in a hurry and exiting too early, makes the traders unable to achieve big gains. They might do this to book a profit that is coming primarily to them, they have a fear of losing the profit that is added in their positions. This is one of the usual intraday trading mistakes that are hard to avoid.

Many traders believe that we should not wait for the next best outcome rather capture the gain that is coming in. This type of strategy might be successful if you are a scalp trader but being an intraday trader one should test the movement and make a solid prediction that is achievable. 

It is always advised to exit only when there is a clear indication. If there is no exit signal, one should patiently be waiting for their target profits.

Take away

From the article above, we grasp some of the common intraday trading mistakes made by day traders. Each of the sub-headings about these errors depicts a clear explanation about why such mistakes are to be avoided. 

Some of the common mistakes that you will find in this write-up about trading errors are not following a trading style for the day, avoiding stoploss in trades, relying on trading tips and advice, choosing a low-volume trade, and being impatient while trading. We hope that we have covered some of the major tips to fight these mistakes and perform successful intraday trading.

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