Achieving success in intraday trading is not easy. It’s like a special job. Which demands study, time, and effort in the right direction. But there is more possibility of loss in this.
Intraday means that you bought a stock when the market opened in the morning and sold it after earning a profit within a short time. You keep this stock with you only till the end of the market and do not take delivery of it. Intraday trading involves equity buying and selling, future, option and commodity.
But the number of people affected by it is very high in India. Let us know what is the main reason for this –
5 Mistakes by New trader
1. Lack of Knowledge
Many new traders jump into intraday trading without any solid information or research. They do not have a proper understanding of the market and suffer losses as a result. Therefore, I advise you to buy 1-2 stocks in the beginning and gradually increase your knowledge. Buy books, there is a lot of information and tutorials on the internet, you can buy them.
Along with earning profits in the stock market, you also have to spend on yourself. There are free and good tutorials related to the stock market available on varsity zerodha online.
2. Over-leverage
Using leverage can boost your profits, but it can also increase your losses. Using excessive leverage can be particularly damaging. If you follow my blog, you will know the meaning of leverage.
Leverage is the concept of getting a stock at 3x to 5x lower price. Suppose a stock is worth Rs 100. If you want to buy 100 shares then you will need 10000 rupees. But with the leverage option, you can buy this stock at 3-5 times cheaper. Meaning you will be able to get 100 shares from Rs 2000-3000. But on one condition, you have to sell this stock at the time of 3.15 i.e. before the market closes. Otherwise, you may have to pay full stock amount and charges to the broker.
3. Wrong Strategy
Let me tell you one thing about the stock market which I have also realized – every trader has a different strategy in the stock market. Learning is not only important but also implementing is also very crucial, so that you can understand the market and build a strategy according to your investment.
Many traders rely on the same strategy, whether it works or not. They do not evaluate their strategy from time to time and test. If one strategy is not working, try another one. There is nothing wrong in this because the market benefits only those who stay for a long time. You should not focus on the others in building your own strategy, which results in loss.
4. Poor Risk Management without strategy
Risk management is very important. Imagine, you have an amount of Rs 10,000 for investment. Accordingly, you can bear a loss of only Rs 500. You have to understand that Today is not your day, when you hit the loss target and if the trade goes wrong for you, you have to walk away with the loss because we have to play long. When you make a loss, you should be strong and have patience and end with positivity even after loss – “Tomorrow will be yours”. But don’t lose full money or capital. As the investment amount increases, more losses will be incurred.
Therefore, before taking a trade, explain to your mind that if there is a loss, I will exit at that point which I have set for myself and as much as you can bear.
5. Lack of Discipline
Discipline is extremely important in the world of trading. Indiscipline can put you in a big loss. Discipline means that you take decisions wisely because the market will not go as per your thought and strategy. Unnecessary trades can make you lose all your money. Playing with an open mind will keep you in the market for a long time, and long term means profit and wealth.
Read More: Futures vs Options: Choose the Right Method of investing
At the end
It is important to understand and learn from the failures associated with intraday trading. This makes you a better trader, which increases your chances of trading success. I have discussed the most important factors to succeed in trading in the market, but this is not an exhaustive list. You will also learn a few new things from your analysis in the stock market and implement it according to your learning and strategy.
