How to Become Successful Intraday Trader (Step by Step Guide)
Guide to Become a Successful Intraday Trader
- Do Your Risk Analysis and Personal Audit
- Research and Study About the Trading Styles and Practice Them on Paper
- Create a Routine for Yourself
- Start with a Small Amount and Lesser Trades
- Follow the One Percent Rule
- Review Your Trading Style Regularly
- Utilize Stop Loss
- Don’t Trade During Volatility and Make Trend You Friend
1.Do Your Risk Analysis and Personal Audit
When you decide to step into the stormy waters of intraday trading, you need to know your own risk taking capacity and willingness more than you need to know the market sentiments and movements. Before starting the journey, make sure you are aware of how much your investing capital is, how much of it you can lose in the markets and how much risk are you willing to take. This data and information should always be in front of you, reminding you of your own limits. You should never cross your limits in face of losses, or trade beyond your investing capital in face of profits. Hence, the first step of being a successful trader is setting up your own trading profile.
2.Research and Study About the Trading Styles and Practice Them on Paper
Most seasoned traders and investment advisors would recommend you to do paper trading for testing out any strategy and to check its outcome. While paper trading and rehearsing your trades might seem like a waste of time (especially if you are booking profits in your paper trades), the truth is that it teaches you a lot of lessons. You must always enter the markets after fully testing and studying about the strategy you are planning to put to use in the markets. You should never trade an untested strategy as it might lead to losses.
3. Create a Routine for Yourself
Once you have figured out your investing capital, risk taking capacity and willingness, you should generate a routine for yourself which is not only limited to the market hours, but also for your daily life. A professional intraday trader has to consider trading as his full time job instead of treating it as a part time thing. You should have a fixed time to wake up, finish breakfast and to plan trades for the day. Your daily routine should also include time devoted to reading up news and bringing yourself up to date with what is happening in the world
4.Start with a Small Amount and Lesser Trades
As you actually start placing your trades in the market, you will soon understand that not all trades will result in profits. Even the trading signals given by some of the most seasoned investment advisors like CapitalVia Global Research can result in losses, because the markets are unpredictable. Hence, it is always advisable to start investing in small measure and then scale up your investments as you get the hang of things. Also, with experience, you can figure out which trades are more likely to happen and which are less likely, thus, you can bet a higher amount on the more dependable trades, as compared to the less dependable ones
5.Follow the One Percent Rule
The one percent rule is an essential rule for you if you are starting to trade. You should put only one percent of your investing capital in any one trade during the day. For example if you have an investing capital of Rs. 100,000, then you should invest only Rs. 1000 in one trade and another Rs. 1000 in another trade. This helps a big deal in minimizing losses, if they occur. As a successful trader, you should bear this in mind and trade accordingly
6.Review Your Trading Style Regularly
No trading strategy can be absolutely perfect. A successful trader always keeps reviewing his strategy on a regular basis so that it remains up to date with the market trends and sentiments. If you are facing persistent losses in your trading, then it is best if you revise and look back at your trading strategy and plan. However, you should not do this on the first couple of losses in your strategy. Give your strategy ample time to show sufficient results and then take a call on it
7.Utilize Stop Loss
This is the key to successful intraday trading as well as to preventing your losses in the stock market. No intraday trader enters the markets without a stop loss and you too should always use stop loss order to limit any opposite direction swings in the prices. The stop loss should be considered the Holy Grail of intraday trading and should be utilized at any cost
7.Utilize Stop Loss
Another secret to intraday trading is that you should never try to outsmart the markets and should only place your trades in the direction of the markets. And to assess the direction of the markets, the volatility should subside. It is impossible to say as to what will be the course of the markets if the prices are fluctuating highly. Hence, for being a successful intraday trader, it is important that you wait out the volatility and place trades only once the direction or trend of the market is clear. If there is not strong trend in the market, it is wise to stay away from trading for that day.
Conclusion:
Following these tricks can ensure that a person gets the hang of intraday trading. However, nothing can happen overnight as intraday trading is not a place to ‘get rich quick’. A person needs to work hard and devote a lot of time in intraday trading to become successful.
Author
CapitalVia
Pioneer in Investment Advisor
