Common mistakes while on Day Trading (Intraday)
Investing is a legend, where the trading is an art. Investing is likely a boring, but it’s a mean of business. Patience is the key for the Investing and become its success. On the other hand, Trading is a quicker, so you would make bugs.
There are few common bugs (or) mistakes that one as a trader would do this emotionally and non-practically. Herd mentality will mostly impact on market price, due to this fact one can also lose the money.
- Generally, Day Trading or Intra day is a risky one and it decides on Risk to Reward. You cannot just trade simply with the Emotion. You should prepare and practice before entering into the trading in the Stock Market. Be practice more on Paper trading, nowadays there are so many mobile applications available on dummy trade.
- Once you plan to trade in real time, Plan for the Trading design. The Trading design is nothing but it’s a simple plan that what would you need on today’s market. For example, if you need a $10 or 3-4 % of returns on your investment, then make this a plan and stick with it until the closing of market. Don’t be violate on this plan, it may hurt you badly 🙂
- Day Traders are ideally emotional. Make your trading design one day before, so that you can have some ideas and analysis of few stocks to trade. When entering into the real time trading, you should not be divert. If your trading plan fails on the day, simply leave from the market on that day. It’s applicable for after profit booking also. Don’t lookout for the next one or your friend’s picky.
- Don’t trade frequently or take leverage in the beginning days. Use your real cash to trade, so that you cannot make more mistakes and it will reduce the initial losses on your investment. Leverage may some times gives you a profit, but it will redirect you to stupid confidence (Over Confidence).
Overconfidence blurs out the risk. Inferiority magnifies it – Toba Beta
- Always aware about what you are opting on Trading days – Margin /Intra day or Delivery / CNC (cash and carry) ? In my earlier days of trading, i made a mistake that hurt me for a long time. I was in the beginning on day trading, by mistakenly i had chosen a delivery option instead of margin on Buying shares and after that i sold the shares on Margin based. Then,i was realized in the evening (Market closing Hrs) and called my broker regarding this and he replied it will be square off, would be tallied. On the next day, i was receiving my contract note, it was mentioned that there is a buying on margin in the market closing and my delivery option is a delivery stock for me. So, i have to pay the money for the delivery received.
- The another thing, i had a loss on intra day due to short (Sell at 1 and the system buy at 2). Then, Short of delivery happened on my delivered stocks in my account. Why i am telling this, because one should aware about choosing the trading option (Margin or Delivery). If you are choosing delivery on both buying and selling by the same day, then it’s not a problem – it would be also treated as Intra day !
- Use Stop Loss – It’s a handy and useful tool, helps you to protect from making more losses. If you are ready to manage the risk, get ready for the Stop loss when it needs.
- Make a habit of examining your trade transactions before Market Closing. It helps you to reducing the Pathetic excuse and make you a Discipline Day trader. On receiving the contract note, you should read everything on that. Check the positions or holdings with your demat account is also a healthy one.
The secret to being successful from a trading perspective is to have an indefatigable and an undying and unquenchable thirst for information and knowledge.
Kindly share your views / comments with a smile 🙂