The general question which every trader ask is how to win in day trading? The answer to this question is simply avoiding the mistakes which most people make.
Here is the list of common intraday trading mistakes that day traders make. One should stay away from them to harvest a massive profit from the financial marketplace.
Never trade immediately after the news.
New announcements sometimes lead to emotional responses and panic responses. It can cause harm to day traders. One should act wisely with a well-planned strategy on these market fluctuations.
Many traders also make a mistake by placing the order as soon as the market open. It leads to price volatility. A trader should wait for about 15 to 20 minutes and monitor the pattern and market to harvest gains.
Never leave out the leverage or margins.
Margin largely affects the trade. It is a valuable thing for a trader to purchase the larger portion of a trade by borrowing a percentage of capital from a broker. Margin can generate profitable returns if used correctly.
One of the brokers offering significant leverages (maximum 1:500) with the best trading platform is TradeATF. Visit the official site of TradeATF for opening a trading account.
Starting day trading without a proper plan can be destructive.
Another point in the list of intraday trading mistakes is jumping into the trade without any proper plan. It can put you in the worst situation, so one must plan on entry and exit points, and most importantly, one should have an escape plan in case of loss and risk.
Look for news updates.
Closely monitor and stay updated with the news reports. Analyse each trade and check whether it has the potential to grow in future. Always remember to follow authentic news channels.
Never chase trades
The next intraday trading mistake list is chasing fast-moving trades rather than focusing on stable and steady returns. Thus by borrowing a massive amount from the broker, then they can afford. It results in the degradation of the trader's reputation and also wipes out the trader's account. If you miss out on a particular trade, try not to chase it in the expectation that you will catch it up.
Denying to cut losses can cost you much.
Humans are generally hopeful about things. Many day traders hold the trade in the hope that the table will turn towards them. It is a fatal mistake. Unwillingness to cut losses can eventually harm your account. If the stock is going in the opposite direction, there is no need to continue with it. By this, you can prevent small losses from growing into larger ones.
Never risk more than what you can afford.
Extreme risk does not generate any profit; hence the risk to reward ratio should not extend a specific limit. No matter what is the interval of trade, an investor should never risk more than one per cent of total available capital within a single trade. Day trading also requires extra attention to daily risk. The maximum value of daily risk can be about one per cent or less or equivalent to net daily gain over an interval (can be one month). Using this tool, investors ensure that they are not risking more amount than they can afford to lose.
Don't change your trading strategy too often.
Last but not least point in the list of intraday trading mistakes is not to change the trading strategy most often. Many traders have this habit of change their plan whenever they realise that things are not working in a favourable direction. While doing this, they forget to consider external trading factors like volatility or market dynamics.
The Bottom Line
One of the biggest problems with intraday trading is that traders sometimes fails to determine or do not know the exact point to capitalise on the financial markets. For this, the knowledge of behavioural finance and the principles of psychology is very important. A trader should be clear about which trade will work and which will not. The slight difference between prophecies and self-belief makes gambling and day trading different.
Apart from this, a trader should also pay attention to the common intraday trading mistakes that investors generally make and avoid them.