When we enter intraday trading, mostly it creates losses. Why?
Because of the lesser learnt trading strategy you adapt and lesser commitment to have an exit plan!
First of all most of the people do not follow or have a trading strategy for themselves.
They just want to know a buy price and an exit price. They are not even concerned about having a SL. (Lets see if someone can actually read this answer till the end.)
There are so many simple strategies that actually work but people are not ready to give few mins a day to learn them while they are ready to loss 2k to 30k a day and up-to cumulative loss of few lakhs.
Trading is simple for people who understands the following
- Trading is not complex. People still make good profits using Basic strategies. The risk and reward is same in complex strategies also.
- Trading strategy is just a small component of making profits while trading.
- Agility to take quick decisions either to exit in losses or to book partial profits is another component in making profits.
- Each trading strategy has a probability. (Every trade will not end in profits).
- Deeper understanding of the indicators. (Basics and purpose)
- Deeper understanding of the trading strategies. (History repeats itself.)
- Dedication and concentration in trades. Devote your best time of the day for trading. If you feel your strategy is intra-day, dont trade more than 2 hours a day. (To trade 2 hours you can use 5 mins or 15 mins candle on a large cap with good volumes.)
- Most of the strategies taught to beginners fail. (Because the person who teaches may not give an exit plan)
- Successful traders forget about the losses and gain of the previous day and start fresh.
- Successful traders devote 1 hour to identify and study a good chart. (1 hours to study and 2–3 hours to trade. It take good 4 healthy concentrate hours to make good money.)
- Every chart cannot be traded every time. Hurrying into buying something will end you up in losses as the probability of hitting target can becomes lesser than hitting SL.
Tips for Intraday Strategy:
- Algo trading is ruling the world (70% trades in forex). In India it is just 40% trades.
- Breakout strategy has the worst strategy available. (You can use it reverse trade to make good profits)
- Higher the Moving Average, higher the chance for the stock to stay above it. (Shorter Moving average breakouts fail and can be used to reverse trades.)
- Make use of ADX indicator to identify momentum in charts. Trade in stocks with ADX above 20 for a better trade. ADX is Average Directional Index.
- Make use of ATR to understand average intraday movement in a candle stick. ATR is Average True Range. For Tata Motors as today ATR (14) is around 10 in daily charts. It means Tata Motors moves only 10 points on average for last 14 days. So don’t expect to make 30 to 40 points move intraday. Expect 40 points profits in 7 to 14 days in position and have 20 points SL.
- Learn Bollinger Strategies like Bollinger Squeeze, Bollinger Range with RSI, etc. Learn above Fibonacci Retracement. Learn above channelling, Head n Shoulder patterns, etc. Learn above Open high low and Gap up strategies.
- Learn to use proper time frame in charts. Use 15 mins candle for half day trades. Use 5 mins candle for 1–2 hour trades and use daily charts for positional trades. Understand volatile periods of the market. If any issues like war, trade issues are going avoid overnight positions.
- Best time to trade Any market would be 1 hour from start to 3 hours from Start. Eg. 10.15 am to 12.15 am for Indian Stock Market.
Sorry if the answer was long and boring. It is my duty to share my knowledge to make sure you learn something new about trading.
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I am Vinoth Kanna, Admin, Gale.in. I am into investing and trading for last 7 years. I love sharing my knowledge and to educate people. I write articles regarding stock market to enlighten people about stock market and also share stock ideas at Gale.in to ensure retail investors of decent profits. You can contact me at email@example.com for stock queries. Have a wonderful time at Gale.in.