Mistakes To Avoid While Doing Intraday Trading
Intraday trading is also known as day trading in the stock market. Day trading or intraday trading is a form of speculation of stocks or securities of a company or business in the stock market in which a trader purchases and sells an instrument, especially which is a financial instrument, within the same day of trading; the reason behind this of buying and selling in the same day of trading is that their all positions exited before the market closes for that day.
Mistakes To Avoid While Doing Trading
That’s why it is called day trading. In simpler terms, it is purchasing and selling stocks or securities in the security market only on that specific day of trading before the market closes.
Let’s take an example; suppose a trader is buying a stock in the stock market in the morning at 9:30 ABC stock for hundred rupees and sells that ABC stock at 12:40 pm for one hundred two rupees. In this example, the intraday profit of the trader is two percent.
Advantages Of Trading In Intraday Trading
- If talking about intraday trading, one of the major advantages of trading in intraday trading is that it gets you rid of overnight risk as the trader in the intraday has to close their position before the end of the trading day, which ensures that their profitability is remaining unaltered by the movements or the events that are happening during that period.
- Intraday trading provides higher returns to the intraday trader. When intraday trading is played correctly with the best knowledge and strategies can offer huge profits in trading in just a short period.
- Another big advantage of intraday trading is that traders with just a little capital can start their intraday or day trading journey easily. In addition, some brokers offer special quadruple leverage benefits to seasoned brokers who have made millions of dollars or even more in their registered trading accounts.
Disadvantages Of Trading In Intraday Trading
- Intraday trading comes under the list of types of trading in the market, which is considered highly risky. It is one of the primary disadvantages of intraday trading.
- Intraday is not a type of part-time job. The trader trading in the intraday market needs to sit in front of their desk from morning 9 to afternoon 3:30 pm to track the intraday trading market efficiently and then have a speculative bias. Intraday trading requires full-time devotion, discipline, and accuracy, which is impossible with a part-time job.
- The volatility of intraday trading of a five-minute or thirty-minute chart is very high compared to the monthly or six-month chart. That is why it is simpler to take trade according to long-term charts.
Common mistakes in intraday trading you should avoid
If you are a new trader or even expert trader trading in the intraday market, you must have many a time or at least a few times come across some cases where you have missed your trade and left losing your money just because of some common mistake that you have done, isn’t it?
In this part of the article, we will discuss some common mistakes you should avoid while trading in the intraday market.
- Skipping Performing Technical Analysis: Traders trading in the intraday market many times start their trading without performing technical analysis. We can get the surety of the stocks while trading in the stock market.
The best thing a trader can do is study and analyze the history of the stock, company, or business, like its past performance and decision-making according to the situation.
You can consider this as your first step as a trader; whether or a beginner, intermediate, or experienced doesn’t matter. Analyzing the stocks of a company or business and their past performances plays a crucial role in your trading and can be a beneficial part of it.
- Just going by tips from others rather than learning from self-trade experiences: Many traders make this mistake, especially intraday traders who just depend on and go by the tips given by others rather than learning from experiences of their self-trading in the stock market.
Taking tips from experienced and expert traders is indeed one of the best things a trader can do, but relying fully on it is not going to help you. You, as a trader, should learn everything about the market and trading and better learn more about your and others’ experiences and don’t repeat your and others’ mistakes.
- Not setting up your stop loss: Stop-loss is a trading tool designed explicitly for traders to save themselves from significant losses in the market. Many traders, especially experienced and expert traders, use stop-loss as it provides them an idea about the amount of loss they can bear when it comes to their losses in the stock market while trading.
- Trading of illiquid stocks in the market: This mistake of traders comes under the list of the most common mistakes ever that traders make while trading in the intraday trading market. This mistake is specifically due to their lack of research on the stocks they are trading in the intraday trading market.
Traders in the stock market, especially in the intraday trading market, should understand for sure that the liquidity of the stock in the market plays a very crucial role in intraday trading.
- Traders not taking a view of the market in 360 degrees: Traders, especially in the intraday trading market, miss or tend to ignore taking a 360-degree view of the trading market.
As fundamental investors in the intraday trading market, these traders need the depth and performance analysis of stocks that day traders need to understand the nuances of trading structure in the market.
I would like to mention again that join the best Stock Market Institute for this.