7 Successful Intraday Trading Tips
There are some tips successful intraday traders follow, and if you want to be successful like them, you should do the same. The following intraday trading is true for successful intraday traders.
- Our primary focus is on limiting or managing risk.
- Learn from our mistakes.
- Smart intraday traders focus on flawless execution.
- always trade with a positive risk-return trade-off.
- pursue realistic expectations.
- Beating the market is not on our agenda.
- operate with discipline and a trading plan.
1. Focus on limiting or managing risk
Managing or minimizing trading risk is crucial when running on leveraged positions in intraday trading. Most intraday traders who are successful believe, and rightly true, that risk can be controlled, not returns. Thus, your focus, if you want to be successful, should be on managing trading risks. To manage risk, they set strict limits during the day, month and overall for capital depletion. Also, successful intraday traders have a routine that involves backing every trade by a strict stop loss. They don’t engage in any trading without identifying the maximum loss on the trade. Besides that, these traders also have a habit of staying out of the market when understanding it becomes difficult.
2. Learn from our mistakes.
Making mistakes is sometimes inevitable, especially in trading. But learning from these mistakes is what makes one successful, this is true for successful intraday traders. Most successful intraday traders make mistakes, but the good thing about it is that they learn from these mistakes and make sure there is no re-occurrence. Sometimes, stop losses may be triggered consecutively. However, smart intraday traders develop a habit of sitting back, observing and evaluating the primary reason and then take instant corrective action. As a matter of fact, these traders feel that even if they lose money in a trade, the lesson should not be lost.
3. Smart intraday traders focus on flawless execution
How you execute the trade has a significant impact on how well you will perform; this also applies to intraday trading. Smart intraday traders do not hesitate when shifting to a phased approach to buying when the market is volatile. They also optimize the trade price and get better market deals through market orders and limit orders. These successful traders make use of technical charts in minimizing risk by buying as close to support levels and selling as close to resistance levels. They are also focused on reducing execution and statutory cost as much as possible.
4. Successful intraday traders always trade with a positive risk-return trade-off
Targeting profits should be a function of the risk included in your stop losses. For instance, you cannot have a profit target of Rs4 and a stop loss of Rs5. The risk-return trade-off is negative in this example. Successful traders make sure that their profit target when trading is greater than the risk; thus, they calibrate their stop losses and return targets. One of the key trades criteria used by smart traders is using a favorable risk-return trade-off.
5. Go after realistic expectations
Your expectation is unrealistic if you are hoping to achieve a 5:1 risk return trade-off. Intraday trading is more of having realistic expectations. Successful intraday traders are aware that your returns are a function of risk. In economics, there is no free lunch, and in the market, having a risk-free trade is not possible. Smart intraday traders usually set their market expectations according to market reality.
6. Smart traders never try to beat the market
You need to rethink if you feel taking a contrarian position in the market will make you a successful intraday trader. You may succeed sometimes, but as a real season intraday trader, you should always move on the side of momentum. You will never find smart intraday traders trying to outperform or predict the market. Their aim is to understand the core trend in the market and act accordingly. Being humble is paramount.
7. Operate with discipline and have a trading plan
Most of the successful intraday traders you see operate with discipline. To be successful, you need to have a trading plan, a backup action plan and execute your trades. Being disciplined is not a quality or skill, it is a culture or habit for successful intraday traders.