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Intraday trading involves
taking long or short positions in securities and squaring off the positions
before the end of the trading day. The tools and techniques used for intraday
trading are fundamentally different from those used for long-term investing. Intraday
trading involves taking long or short positions in securities and squaring off
the positions before the end of the trading day. Intraday trading requires two parties for a trade,
one to sell and the other to buy the stocks. The market is very volatile, and
profits do not depend only on the market going up. You can make a profit even
when the market is moving downtrend. A day trader can make money irrespective
of whether the market is going up or down.In this article, we will discuss some of
the disciplines that a day trader should get used to before taking up intraday
trading.
๐ Trade
with money you can afford to lose: It's vital to set aside a certain
amount of money for day trading. But it is important for a trader to first
focus on how much loss he is willing to take overall, and on a per trade basis.
๐ Follow
strict stop loss: One of the biggest traits that set apart winning and
losing traders is discipline. Make it a habit to use ‘stop-loss’. A stop loss
order is an automatic order to buy or sell a stock when its price reaches a
specified ..
๐ Entry and exit strategies: Sometimes
a trader might get fascinated by a particular stock, but we should not forget
that one has rely on specific strategies to make a profit from it. One should
stick to certain set guidelines religiously in intraday trading.
๐ Choose
liquid stocks: Liquid stocks tend to have high volumes and this can
allows for purchase or sale of larger quantities without significantly
impacting the price. This can help grab any potential gain that may arise from large price movements on any given day.
Since intraday trading strategies are dependent on speed and precise timing, a
high degree of volume makes it easier to get into and out of a trade.
๐ Keep business and emotions
separate: The intraday market is very volatile, and we may experience
great profits or losses within a short span of time. Hence, it is important to
have tight controls over one’s emotions. One should not get too excited by the
profits he makes, and not get disheartened by losses. A day trader has to have
a very alert mind to be able take quick decisions. For this, one has to have a
mind free of emotions.
๐ Do not over trade: This is the golden rule of intraday trading. The share
market may not always trend, or trend in a predictable manner. Trading only in
a handful of stocks at a time is the best way to go about with your day
trading. If we continue to ignore the market response, that can be a sure-shot
recipe for losing your money.
These rules are really important for intraday
margin trading. It is essentially an activity that calls for discipline and
risk management and can only be perfected over time. It would not be wrong if
we say that intraday trading requires bringing a certain of uniformity to the
trader’s lives.
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