In a single trading day, stocks, commodities, or currencies can be bought and sold using the quick-moving financial market strategy known as intraday trading. Using volatility, traders aim to gain from short-term market fluctuations.
The possibility of making rapid money quickly exists in intraday trading, but it is risky. If you want to succeed in this fast-paced atmosphere, you must steer clear of frequent blunders. However, those who like to learn more about intraday trading might enroll in stock market courses in Kolkata. We will examine the ten most common mistakes that traders make when trading intraday in this article.
Top 10 Mistakes to Note When Doing Intraday Trading
Intraday trading can be profitable but also hazardous. Here are ten things to avoid if you want to have a successful intraday trading experience:
- Overconfidence and Greed
While traders who place a few winning trades tend to be overconfident and make irresponsible actions that are frequently likely to affect their trading selections, losers tend to be upset and regretful about the loss. A streak of success does not ensure that you will remain winless in the future. A string of profitable deals can make you greedy and urge you to place trades that aren’t essential. It is important to avoid this and to create boundaries for yourself.
- Not Using Stop loss
One of the most common mistakes people make in the stock market is failing to set a stop loss on their bets. A stop-loss order tells your broker to sell a bought security when prices decline rather than increase. Doing so will help limit your loss.. This will assist you in limiting your loss.
Most traders fail to place a stop loss order, expecting that the price would reverse and move in the correct direction. Even experienced traders, not just novices, commit the blunder of failing to close their position in time with minimal loss and instead suffering a significant loss.
- Trading Volatile Stocks
Illiquid stock trading is a common error committed by novice investors. It comes about because additional market research is required. It is essential to recognize that a stock’s volume or liquidity significantly impacts intraday trading. Consider the following scenario: You acquire stock in the morning to sell at a profit before the market closes, but you end up with no bidders. Your sell order might not be carried out as a result, and the stock would instead be remitted to your Demat account.
- Trading on Rumors
Since the stock markets are extremely unpredictable, and it can be difficult to predict how the markets will respond to a specific news or rumor, trading based on news is one of the riskiest sorts of trading. If you have a well-thought-out plan, have traded according to it, but have not yet considered the obvious effect of news or rumors on stock prices, there may be a sudden volatility that might wipe out your invested cash.
You were assigned a target of a greater level, which can assist you in generating a profit in the deal. However, in your haste to book profit, you closed your position before reaching the target price, resulting in a partial profit. This occurred as a result of a need for more patience. Even though traders receive all the signals that the full target will be met, they still close their positions ahead, leading to a lower profit.
- Improper Strategy
Many intraday traders lose because they need a proper trading plan and instead trade based on gut feelings or rumors. You should always have an intraday trading strategy and stick to it. A plan must be founded on thorough market research and follow a tried-and-true procedure.
- Emotional and Negative Attitudes
Being overly concerned with gains and losses, and becoming despondent in the event of a loss, are indicators of a poor intraday trader. When trading intraday markets, it’s important to control your emotions and avoid letting losses stop you from trading completely. By adhering to intraday trading rules, you can always treat profit and loss with the same spirit and strive for success.
- Changing Strategy Too Often
Once you’ve decided on a strategy, it’s important to persist with it long rather than abandon it after the first loss. Changing strategies frequently in intraday trading is also problematic because each technique demands practice and patience. Because markets are unpredictable, no trading technique can guarantee 100% success.
- Following Herd Mentality
In life or intraday trading, it is never a smart idea to follow the crowd. It is a deadly error that can result in losses for a trader. Each person has varied market expectations and risk tolerance. As a result, mimicking another trader and replicating his trades is a bad idea. By imitating seasoned traders like Rakesh Jhunjhunwala or Warren Buffett, many traders make this mistake in the hopes of becoming traders like them. Still, they need to recognize that there is a significant difference between these bigwigs and themselves.
- Not Adapting to Technology
Today, technology is very significant in stock market trading. With the widespread usage of high-frequency trading, it is even more critical to have a link to the markets and an even faster communications platform to execute deals on time. You must grow to avoid losing out on quality trades and becoming disheartened.
This article has analyzed the common mistakes you should avoid in intraday trading. If you want to avoid such mistakes, it’s best to seek help from a professional stock market teacher. They are well-trained specialists who understand how to trade securely and take the proper stock positions. If you are a novice trader looking to trade intraday, you should get advice from specialists to prevent making such mistakes.