Here are some of the rules you need to keep in mind while starting on your intraday trading journey:
1. Entering and exiting the markets at the right time
A good strategy is to trade with the current intraday trend, which offers a window for low-risk entry while providing a higher probability for gains if the trend continues. Capitalising on such trends can help you identify patterns and get an entryway into the right trades and stop-loss strategies.
2. Always have a stop-loss mechanism in place
This is a continuation of the first point where having a stop loss is essential as an exit strategy for a given trade. If the stock is not performing as anticipated, stop-loss can be your saviour.
If the stock performs at par with your expectations, then you need to have different target levels, like T1 and T2, so you can make exits at these different price points.
3. Be aware of past performances
While past performances do not guarantee future success or failures, broadly speaking, stocks do follow a certain historical trajectory.
Hence, as a beginner, you should choose businesses that have been able to preserve capital while also providing returns without taking on too much risk. Also, opt for stocks with a high average trading volume to ensure you can find buyers whenever you want to exit the trade.
4. Do not get emotional or impulsive
As a beginner, your main focus should be to identify and pick stocks with good historical performance and devise strategies based on these stocks.
Also, have a well-defined entry and exit strategy in place, along with a stop loss level, so that you don’t give in to your emotions when the markets fluctuate. To be a successful intraday trader, you cannot give in to your emotions mid-trade and should be in control of your impulses while trading.
5. Take small steps
Just because you made a few good trades as a beginner does not mean you become overconfident and aggressive in holding your positions. To begin with, you should focus on only one or two stocks, and eventually, as your risk tolerance increases, you should increase the volume and value.
6. Stay away from penny stocks
Penny stocks are high risk since they provide high returns but are also highly volatile. Hence, as a beginner, you should avoid trading these stocks as they can lead to capital loss if they crash.
Only after gaining significant experience and getting an idea about market trends should you opt for this category.
7. Remaining composed and calm
Since markets are dynamic and full of action, they can easily get the better of you at times and make you anxious. But to be a good trader, you always have to rely on logic and rationality. Anytime you give into your greed, fear, or any other negative emotion, there is a chance you will make a mistake.