Five Intraday Trading Tips | Differences between intraday trading and long-term equity investment are dramatic. This site has thus far only featured posts about long-term investments. When opposed to buying stocks, trading intraday is a riskier bet. The stock market has been extremely turbulent recently. Intraday trading is the only way to make a living in the stock market. “Either you change yourself or change will change you,” as the old adage goes. To make a fresh start, I dove into Intraday Trading.
The single most important thing is to separate your long-term equity investment from your intraday trading. As I discussed in my post titled “Fundamental Analysis vs. Technical Analysis,” extensive technical analysis is required for successful intraday trading. So far in my experience, I’ve learned that overthinking things can leave you stuck. Among the many indicators available for use in technical analysis are
(a) We use a tool called the Relative Strength Index (RSI) to measure how
(b) Changing Average (or MACD) Convergence Divergence
(c) Moving averages can be simple or exponential.
(d) A Look at Bollinger Bands
(e) Fibonacci Retracement
(F)Average Indicative of the Real Range Orientation Indicator
ALSO READ: THE ESSENTIAL GUIDE TO BITCOIN
Five Strategies for Day Trading
1. Recognize Stocks with a Strong Trend
The role is the most challenging in all of Wall Street. It’s a high-stakes gamble, and any mistake might be disastrous. Keep in mind, though, that the trend doesn’t last long in the highly erratic market. It complicates the process of choosing stocks to invest in. There are occasions when the equities I choose out for short selling end up going up that day. Hence, finding a clear stock market trend is crucial for financial success. This trend may be rising or falling. Losses are possible in intraday trading if the underlying trend is poor. There will be days when you can’t identify equities with a clear uptrend, and on those days you should probably just skip intraday trading altogether. In other words, trading should not be done merely for the sake of trading. Rule #1 in Intraday Trading is to only get started once you have found a stock with a clear up or down trend. Among the indicators that can be used to deduce the direction of a stock’s price are
(a) Daily Open Pricing (Pre-Opening Session) (b) Volume (c) Delivery Quantity (d) Delivery Percentage (e) Variation in Cost (f) Options and Futures (g) Stock Volatility (h) Range (i) Changeable Points
2. Commence At the Beginning of Trade
Trading activity was extremely turbulent within the first twenty to fifteen minutes of the day. The early trading period is typically 20-30 minutes. In my experience, the trend in most equities is determined within 30 minutes, and by that point, there is no longer any time to make a trade. Soon after the first upheaval, the market prices settle down and show only minor fluctuations going forward. Gains are greater in strongly trending stocks where a position can be acquired in a matter of minutes. You can take the position in a matter of minutes if you are confident in the trend. Nonetheless, the risk involved is substantial. One should wait for at least 20-30 minutes before making any trades. In a nutshell, for intraday trading, you need to make a move during the first 30 minutes of the session.
3. Balance your profits and losses.
Greed and fear drive intraday trading. That could wipe out your 100% paper profit and cost you. Unrealized trade profits are fictitious profits. The entry and exit points should be known by intraday traders. To do this, you must set your trade gain and loss. Stop losses are set at 1/3 of predicted benefits by expert traders. To make the day’s trade lucrative. Did I mention this in How to control your stock market loss? Intraday trading should never begin without a stop loss. Though stop loss is 1/3rd of predicted gains, it may result in larger losses if it is near a pivot point or resistance/support level. Near pivot points, resistance, and support, volatility is considerable.
4. Traders should limit themselves to no more than two or three transactions a day.
It’s extremely risky to start many trades at once during a trading session. Just about two or three meals a day are typically initiated by even the most experienced traders. Stocks used in intraday trading are quite fluid, therefore the trader has to be alert until the position is balanced. While trading with full attention, humans can’t handle more than a couple of stocks at a time. So, I started off investing in a single stock and have since expanded to daily trading in two equities.
5. Don’t trade stocks that move based on news or results every day.
News impact on stock prices is uncertain. Traders can’t predict the stock price’s trend. I saw surprising reactions recently. Such stocks are attractive for rapid gains. Remember Golden Rule #1. Only buy strong-trending stocks. Avoid stocks with uncertain trends.
Day traders prioritize avoiding losses and maximizing gains. Intraday traders must be disciplined. Even if it’s early, I close my transaction after reaching the daily target. It’s tempting to make more money and start new trades, but remember you missed the trade’s pulse. Only the first few minutes of trading reveal the pulse. Instead, if a trader makes bad calls, quit for the day. It’s not your day. Disciplined intraday trading can make you a living. Yet, ad hoc methods can lead to difficulty. This approach is never flawless, but time and experience teach a lot. Some traders profit from their blunders, while others quit.
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