What is Intraday?

 

Intraday trading is nothing but buying and selling of stocks on the same day. People do intraday to take advantage of price moments and fluctuations that exist in market. This moment of price provides a great advantage to a person who has the knowledge along with understanding to earn money.

 

For Intraday, trading it is important that a person has time to spend, as he would need to sit in front of system and take decisions based on his judgment. In order to take correct judgment it is important that a person understands the market and the implications of his decisions otherwise it can prove fatal and a person can incur huge losses.

 

Some important things to note while doing Intraday Trading rules that will be helpful in order to earn profits consistently.

1 Trade like a guerilla warrior
you must learn to adapt quickly to changes. If the winning side is changing, do not hesitate to join the new party and to commit all your forces to this side (capital, mental, emotional)…until the market conditions change. Don’t be possessive for any stock.

2 Be disciplined
Create a game plan then stick to it. A trade does not simply consist of a position. It consists of a position plus reasons for having the position plus a stop loss level plus profit taking levels. In the end, your discipline will save you when markets get rough.

3 Buy high…Sell higher - Sell Low…Buy Lower
Do not try to bottom fish or pick tops. When you think you, know the trend, and then follow it.

4 Think big picture but trade like a technical analyst
You must understand the fundamentals behind your investment ideas but you need to understand the Technical Analysis too. When your fundamental and technical signals point to the same direction…you have a good chance to have a winning trade.

5 Do not use excessively tight stop losses
Spend more time identifying a good entry point. Be patient. Give some freedom to the market. Place your stop losses carefully.

6 Hit your stops
The first stop is the cheapest stop on a losing position. Do not follow the temptation to “hang onto” a losing position that has gone through your stop loss level. It might work a few times but one day you will get bankrupt  if you trade without discipline.

7 In a Bull market…Be long or Neutral - in a Bear market …Be short or Neutral
many people forget this rule and trade against the trend by calling for short-term changes in market conditions. This usually causes psychological imbalance and frequently leads to losses.

8 Go for the most powerful market trend
Do not focus too much on markets where the trend is not strong enough or the market is range bound or choppy. Commit your forces to the stronger trend.

9 Accept losses they are part of the game
Prepare yourself mentally and emotionally for this eventuality. If you make a loss then don’t trade again, Instead take a off for a day and relax and try to analyze as to what went wrong. Was it your mistake or were you trading on the wrong side.

10 Resist the urge to trade against the trend too early
the trend is usually right (fundamentally). Be patient. Wait for the trend to turn. When the fundamentals and technical are turning to the other direction, wait a bit longer then enter. Always make trend your friend in order to be successful.

11 Never add to a losing position
this is a recipe for disaster. Just add to winning positions especially when the market is retracing.

12 Do not make a winning position lose
Use trailing stop losses. You must learn to take profits.

13 Bear markets are more violent than bull markets
you can trade bear markets with smaller positions. Expect violent retracements so get in the habit of taking profits. Book profits wherever you get, and get into the habit of revising your stop losses so that you can safeguard profits.

14 Keep all your technical analysis simple
Use simple support and resistance, Fibonacci retracement and reversal days. A good tip: When yesterday’s daily trading range is the smallest of the previous last 11 days trading range…be ready for a big move and some volatility.

15 Be aware of market liquidity at all times
Assets do not just have prices. They have liquidity levels too, and just as prices change so too does liquidity. Illiquid assets do not trade in the same way as liquid assets. Only trade lower-liquidity assets if there is sufficient compensation for the lack of liquidity and you are a true expert in the asset class.

16 Be intellectually honest
when you are wrong admit it, learn from it and go on to the next trade. The market rewards intellectual arrogance with losses and pain. If you want to stick to your point of view no matter what the evidence may be to the contrary… become a politician.

17 Wall Street climbs on a wall of worry
Be aware that the most likely time for a bull market to end is when everyone is bullish and the bottom of a bear market occurs when everybody is bearish. When everyone is on the same bandwagon, be careful and get ready to get out.

18 Be aware of Psychological biases in the markets
Bond traders tend to make most money as economies slow and dip into recession. Stock traders tend to make most money when the economy booms. So many bond market participants are always pessimistic and many stock analysts are perpetual optimists. Try to remain objective and observe which market commentators appears objective too.

19 Be patient
the more profound your ideas the longer it will take for others to see them as well and thus the longer it will take markets to move your way. Be patient and give yourself and your trade’s time.

The 20th rule
If you have to…break the rules

 

 

 

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