7 Biggest Mistakes To Avoid While Doing Intraday Trading

7 Biggest Mistakes To Avoid While Doing Intraday Trading

Intraday trading is a risky and challenging game. It’s not only about performing the right trades and booking profits. It’s a lot more about managing risks and staying focused on the current market trends.
Despite being focused and managing risks, several traders commit big mistakes that eventually ends up booking significant losses.
Almost 90% of intraday traders lose their money in intraday trading just by performing one mistake. Here are the seven biggest mistakes that intraday traders should avoid in intraday trading.

  • Not Performing Technical Analysis
  • There is no word called “surety” while trading in the stock market. However, one best thing a trader can do is study and analyze the past performance of a stock or company’s past performance and take decisions accordingly.
    This is the first step that beginner and experienced traders perform while trading. Analyzing the stocks and their history plays a vital role in trading.
    The work of a trader consists of looking at the price, volume charts and several other technical indicators to make effective decisions.
    These indicators help the traders to analyze whether the stock will follow the recent trend and for how long.
    We all know how markets can move and can change the situation in seconds. However, using technical indicators at its best and learning the current trends is the safest bet any intraday trader can achieve.
    The biggest mistake several intraday traders perform is rushing to choose stocks for trading. When trading, always take time and choose the right stock.

  • Going By Tips Rather Than Learning To Self-Trade
  • It’s pretty simple to get profitable tips from traders, but making money from these tips is not easy. The best way to earn profits in intraday trading is by learning self-trade.
    Getting tips from experienced traders might give you some profit but not always. A trader must learn about the charts, understand it’s structure and must learn to trade independently.
    Several intraday traders do not perform this risk, so they lose patience and do not perform intraday trading.

  • Not Setting Up A Stop Loss
  • Stop-loss is a tool designed mainly for traders to save themselves from significant losses. Many intraday traders use stop-loss because it gives them an idea about the amount of loss to bear when it comes to losses.
    A Stop-loss order is a type of order where the trader instructs the broker to sell the stock as soon as possible when the market falls below a predetermined price during the trading day.
    When the market falls, this order gets executed immediately, thus saving a trader from losses. Day traders look to earn more profit because of their high-risk appetite.
    Due to this, they forget to place a stop-loss order while booking a buy order. As day traders, they must think to multiply their profit and be safe from significant losses.
    Remember, placing a stop-loss order does not take much time, and if the market falls stop-loss order can save them by saving all their potential money.

  • Trading in Illiquid Stocks
  • Trading in illiquid stocks is the common and one of the biggest mistakes day traders make, which is due to lack of research. They must understand that the liquidity of stock plays a vital role in intraday trading.
    Let's understand with an example given below:
    Imagine a situation where a trader is buying a specific stock in the early morning and hoping to sell it before the market closes at a profit but end up having no buyers ready for the stock purchased.
    This might lead to a trader's sell order not getting executed and the stock being delivered to you in their Demat account.
    Thus, it's always important to place the trade-in companies with a lot of liquidity in their market shares.

  • Not Taking a 360 Degree View of the Market
  • Many intraday traders catch the trend and ride till the end of the closing day, but it's not simple as that. As fundamental investors, they need to go in-depth and analyze the stock performance that the intraday trader needs to get into the nuances of the trade structure.
    As intraday traders, they must understand the trend running in the market and take a 360- degree view of the market to better understand the market.

  • Developing a Negative Attitude or Being too emotional
  • The primary rule of intraday trading is not to get too attached to the profit and losses and getting depressed in case of losing money while performing intraday trading.
    A trader must always keep their emotions aside and should not let losses come in their way, and stopping from trading altogether will reduce their chances of casualties. Still, it will develop a negative attitude towards the stock markets.
    They must always similarly treat profit and loss and focus on betterment by following the rules to learn while doing intraday trading.

  • Ignoring the Trading Plan and the Trading Diary
  • The trading plan and the trading diary are the essential things that intraday traders ignore. Let's look at the trading plan first.
    The trading plan grabs and outlines how intraday trades need to be conceived and executed. This consists of profit targets, stop loss, factors to consider, and selecting the correct trading hours.
    A trading plan is an entire book for trading activity that a trader needs to adhere strictly to.
    On the other hand, the trading diary records all the traders that happened during the single trading day and the justification and the EOD analysis of performance.
    The trading diary helps the trader find weak areas and improve their trading strategy gaps. If a trader does not give importance to the trading plan and the trading diary, achieving success as an intraday trader will be difficult.

  • What is the primary rule of intraday trading?
  • The primary rule of intraday trading is not to get too attached to the profit and losses and getting depressed in case of losing money while performing intraday trading.

  • What is stop-loss order?
  • A Stop-loss order is a type of order where the trader instructs the broker to sell the stock as soon as possible when the market falls below a predetermined price during the trading day.

  • What is trading plans?
  • The trading plan grabs and outlines how intraday trades need to be conceived and executed. This consists of profit targets, stop loss, factors to consider, and selecting the correct trading hours.