The decisive game of retail trading has just gotten more attractive than ever. With intraday trading, you can buy and sell stocks on the same day and make quick gains in a short time. But, it is not as easy as it may sound, and limited knowledge of this subject can be dangerous.
Have you spent quite some time in the stock market? Then you have probably heard stories from many traders losing their money with their mistakes. And to sum it up, a single wrong move in this market can land you up in a massacre, ruin your morale and not mention your bank account. Intraday trading is one of the riskiest choices in the stock market. Even the most seasoned traders may find it intimidating, let alone the beginners. This trading method is like a game, where you have winners and losers, but the only difference is that the losers outnumber the winners.
Nevertheless, there are a few pointers for you to bear in mind and avoid the mistakes that most traders make. So, if you have joined this market to increase your gains, keep reading this post till the end.
Not Using Analytical Tools
The first mistake traders make is not using analytical tools like MT4 trading. Its analytical range is quite popular and effective. As this platform utilizes technical and fundamental traders, users benefit from the financial news and system alerts. Moreover, you can access over 23 analytical objects, 30 technical indicators, and 9-time frames to formulate long- and short-term strategies.
This lets you focus on all the segments of this chart. The scalpers, on the contrary, will benefit from taking a look at the one-minute dynamics, whereas the swing traders may notice the changes over the month. You can also add new indicators from the free and paid add-ons available on the market.
Not Performing the Technical Analysis
The word ‘surety’ does not exist in the stock market world. However, the best thing you can do as a trader is to study and analyze the company’s previous performance or stock and make an informed decision accordingly. Be it a beginner or an amateur. This is among the first step you must take during trading. Analyzing the stock market and its past performance plays a significant role in trading.
A trader looks at the volume charts, price, and other technical indicators before taking any action or a practical decision. The technical indicators help to examine whether or not the stock will cooperate with the current and, if it does so, how long will it take to do so. You are already aware of how the stock market can alter the situation in a flash. But when you use the technical indicators correctly and keep yourself well informed about the recent trends, it can be the safest option.
Not Putting a Stop Loss Order on the Trades
A common mistake that the majority of the traders make is failing to put a stop loss on the trades. This is one such way that can make you lose money. Are you wondering what a stop-loss order is? The stop-loss order refers to the order where you can instruct the broker to sell the purchased security when the price is going down drastically. This can help you to limit the loss. Not placing the stop-loss order in the hope of reversing the price is a huge mistake that you tend to make. The beginners and even the seasoned traders also make the mistake of not putting a stop-loss order in time and making a considerable loss.
Avoiding Trading in the Illiquid Stocks
Another significant and common mistake that the day traders tend to make is to trade in illiquid stocks. This mostly happens due to a lack of adequate knowledge and research. You are more likely to make such a mistake when you have no idea about understanding the significant role of stock liquidity in intraday trading.
For instance, when a day trader buys a particular stock during the daytime in the hope of selling it at a profit by the time the market closes, they will mostly end up not getting any buyer to purchase the stock. It will only lead to a circumstance where the sell order will deliver the stock to you in their Demat account due to incorrect execution. Hence, any day trader needs to place the stock trade-in company with sufficient liquidity in their stock market shares.
Avoid Risking More Than You Can Afford
Too much risk that doesn’t hold much return. Moreover, the risk-reward ratio should be comfortable, or else the day traders will probably lose in the long run. This is something that isn’t usually related to day trading. A trader must not risk more than one percent of their capital in a single trade regardless of the time length. Expert traders also apply the same rule. Intraday trading needs you to pay extra attention to the daily risk you can implement.
With proper knowledge, discipline, and correct approach, while considering alternative trading pathways, you, too, can achieve success in the stock market. The risk-reward ratio in intraday trading is relatively high, and most traders make a huge mistake trying to increase their gains. Therefore, if you can avoid the mistakes mentioned above, it will help enhance your trading experience.