4 mistakes intraday traders should avoid
4 Mistakes New Intraday traders should avoid:
Most retail traders start with the ambition of succeeding in intraday trading. Though it takes time to perfect the analysis which can be applied for intraday trading, many want to trade intraday.
In this blog, We are discussing the four important mistakes which an intraday trader should avoid.
- Ignoring larger picture Intraday traders don’t give importance to higher timeframe charts, they would go right into 5 mins or 15 mins chart, Since all the action happens in these timeframes. This will not help them understand the larger picture as to what the stock or asset is doing..
This lack of understanding hampers their ability to plan their traders.. Further, understanding the larger picture helps us to find multiple trade opportunities and proper execution of trades.
- Choosing illiquid stocks: Many new intraday traders make the mistake of choosing illiquid stocks. One point which is hardly discussed about intraday trading is the cost of entering and exiting a trade. If there is no liquidity in the market, entering and exiting can be difficult as buyers and sellers don’t show up in these scrips
In case, we have to close trades by the end of the day, we may have to close the trades in loss. We advice you to find out a stock selection criterion which helps you to avoid this. If you are trading in Intraday, stick to very minimal number of stocks.
- Looking for “HOT STOCKS”
Rookie day traders depend a lot on external sources for their trading success. We have seen many retail traders trading based on “NEWS Pieces”. We should avoid such kind of external sources, as
We cannot be dependent on them at all times.
We cannot correct their mistakes at our costs.
Further, it leads to an addictive mindset, We sit before our television sets at 9:00 AM, Eagerly waiting for an expert’s analysis. We typically don’t do any analysis and blindly follow their advice. With time, we become “habitual traders” with a lot of external influence and very little contribution of our own. This makes course correction impossible. Even if we wish to do a course correction, we may not have financial resources to accomplish this. Intraday traders often have improper emotional management and risk management. Their Idea of Markets will be that, they have to be profitable. With that thought, they enter into many unplanned trades, which affect their emotions and finances. Proper trading is good trading.
4.Trading multiple stocks:
Volatility is necessary for day traders and it can cause huge emotional swings in a trader’s mindset. Trading without proper understanding about the stock, can cause you severe losses, on the other hand, Understanding the stocks character can give you an edge over other day traders. This trait separates pros from rookies, A Professional trader knows to trades one stock in 100 different ways, whereas a rookie trades 100 stocks in one way. The point I would like to stress on is that, we should look for opportunities which give maximum profits instead of looking at multiple trades with limited profit possibilities. Choose a proper analysis method, which can serve your all such needs. volatility is necessary for day traders and it can cause huge emotional swings in a trader’s mindset.