When we enter intraday trading, mostly it creates

losses. Why?
Always remember one thing that doesn’t enter in
intraday trading without enough knowledge or
experience as intraday trading is the highest risky
trading pattern which requires the maximum
accuracy because you have to close your trade in
just a day so you need maximum surety about it.
Every new trader thinks that generate a decent
income from day trading is easy, but it's not.

First, we all need to understand that what is day

trading and what basics are required for day trading

Don’t trade in the midst of a volatile market. That is

the cardinal rule. Intraday trading is best done when
the direction and momentum of the market are
predictable. Otherwise, you could end up spending
more time triggering stop losses.
Intraday trading is all about protecting capital. First,
focus on how much loss you are willing to take
overall and on a per-trade basis. Once you can
protect your capital from depleting beyond a point,
intraday profits will automatically follow.
Never trade intraday without a stop loss.
Remember, stop losses are required in most trades
but in intraday trading, it is an absolute must. In the
absence of stop losses, you may end up holding
positions with unmanageable MTM losses.
Always decide your profit target based on our risk-
return trade-off. Stop-loss is one side of the story;
the other side is you also need to take profits. Let
your profit targets be a multiple of your stop loss. A
trade-off of 3:1 or 2:1 is understandable, not 1:1.
Don’t stretch yourself on the margin of trading.
When you leverage yourself on margins keep an eye
on your worst-case loss. Don’t stretch yourself to a
point that your losses become unaffordable in the
event of any black swan occurrences.
Avoid the lure of tips and only trade when you are
convinced. There is no shortage of research analysts
and market experts. Most of them are just
pretenders to the throne. Treat these ideas with a
pinch of salt. There is no alternative to doing your
own research before trading intraday. That works
best at all times!
Staying away from markets is also an important
decision for intraday traders. As an intraday trader,
there are 3 key decisions you make; when to buy,
when to sell and when to sit tight. Interestingly,
most of the money in intraday trading is actually
made when you sit out doing nothing while the rest
of the market is burning profits in the chaos.
Record your wins and your losses and evaluate
them at the end of the day. This may sound
pedestrian and clerical but extremely important.
Keep a tab of trades that went wrong and those that
went right. Keep a scrapbook to analyze what you
did wrong and what you could have done better. It
will really help you in becoming a better trader.
Averaging your trades is the cardinal sin in intraday
trading. It is quite common to buy more of a stock
when it corrects. Averaging is wrong for two
reasons. Firstly, you are running the risk of being
wrong twice. Secondly, you might increase your
exposure to a particular stock more than warranted.
That could also put your capital at greater risk.
Keep a tab on the news; otherwise, you are likely to
fail as an intraday trader. Intraday trading is not
about punting in the markets; it is a lot more
organized. Keep a tab on news and on macros.
Evaluate the flow of corporate actions and results
announcements. All these are useful inputs if you
want to be an informed intraday trader.
Know the companies you are trading, their business,
technical levels, etc. That is not only for
fundamental analysts. Even intraday traders need to
have a hang of what the company is doing and how
it is performing.
Learn to catch momentum and learn to evaluate
F&O data. Intraday trading is all about being on the
right side of momentum. F&O data points like open
interest, option strike accumulation, IVs; Put Call
Ratios are all important indicators for intraday
trading.
Never panic when you are trading intraday. When
you panic you subsidize the other trader who does
not panic. Also, panic forces you take hasty and
wrong decisions in the market which you are forced
to regret at leisure.
Don’t rue over losses, they are part and parcel of
intraday trading. It is good to look back and analyze
why you made losses. But don’t lose sleep over the
losses you made on a day. These are part and parcel
of your trading activity. Take it in your stride.
If you are an intraday trader, beware of the
overnight risk. If you are an intraday trader, stick to
your knitting. Carrying positions overnight runs the
overnight risk and your intraday trader capital may
not be equipped to take that kind of risk. Be
cautious.
There is nothing like a free lunch in intraday trading.
Don’t get carried because you earned handsome
profits on a single day. Markets have the dirty
capacity to hit you when you least expect it. Return
is a function of risk and there is nothing like easy
money.
If something is too good to be true then it is
probably not true. This is especially true if your
position has yielded attractive profits within an
hour. Don’t try to run your luck for long. If
something is too good to be true, just take your
profits and walk out.
Don’t waste your time with stock highs and lows;
they don’t matter. Whether you are an intraday
trader or an investor; nobody has consistently
caught market tops and bottoms. It is not only
impossible but also meaningless. The incremental
benefit is limited so don’t obsess yourself with
buying at the bottom and selling at the top.
Never try to recover your losses through over-
trading. This is a golden rule of intraday trading.
Quite often if you buy and the stop loss gets
triggered, the tendency is short double the position.
This overtrading will lead you to lose money both
ways.
There is no golden rule and only practice makes you
a good intraday trader. Finally, the golden rule of
intraday trading is that there is no golden rule. It is
essentially an activity that calls for discipline and
risk management and will only be perfected over
time. As Euclid wrote, “There is no royal road to
Geometry”. That applies to intraday trading as well.
Further, you need to concentrate on these points
too:

Money management – Before you start, sit down

and decide how much you’re willing to risk. Bear in
mind most successful traders won’t put more than
2% of their capital on the line per trade. You have to
prepare yourself for some losses if you want to be
around when the wins start rolling in.
Time management – Don’t expect to make a fortune
if you only allocate an hour or two a day to trading.
You need to constantly monitor the markets and be
on the lookout for trade opportunities.
Start small – Whilst you’re finding your feet, stick to
a maximum of three stocks during a single day. It’s
better to get really good at a few than to be average
and making no money on loads.
Education – Understanding market intricacies isn’t
enough, you also need to stay informed. Make sure
you stay up to date with market news and any
events that will impact your asset, such as a shift in
economic policy. You can find a wealth of online
financial and business resources that will keep you
in the know.
Consistency – It’s harder than it looks to keep
emotions at bay when you’re five coffees in and
you’ve been staring at the screen for hours. You
need to let maths, logic and your strategy guide you,
not nerves, fear, or greed.
Timing – The market will get volatile when it opens
each day and while experienced day traders may be
able to read the patterns and profit, you should bide
your time. So hold back for the first 15 minutes,
you’ve still got hours ahead.
Demo Account – A must-have tool for any beginner,
but also the best place to backtest or experiment
with new, or refined, strategies for advanced
traders. Many demo accounts are unlimited, so not
time-restricted.
5 Day Trading Strategies

1. Breakout
Breakout strategies center around when the price
clears a specified level on your chart, with increased
volume. The breakout trader enters into a long
position after the asset or security breaks above
resistance. Alternatively, you enter a short position
once the stock breaks below support.

After an asset or security trades beyond the

specified price barrier, volatility usually increases
and prices will often trend in the direction of the
breakout.

You need to find the right instrument to trade.

When doing this bear in mind the asset’s support
and resistance levels. The more frequently the price
has hit these points, the more validated and
important they become.

Entry Points
This part is nice and straightforward. Prices set to
close and above resistance levels require a bearish
position. Prices set to close and below a support
level need a bullish position.

Plan your exits

Use the asset’s recent performance to establish a

reasonable price target. Using chart patterns will
make this process even more accurate. You can
calculate the average recent price swings to create a
target. If the average price swing has been 3 points
over the last several price swings, this would be a
sensible target. Once you’ve reached that goal you
can exit the trade and enjoy the profit.
2. Scalping

One of the most popular strategies is scalping. It’s

particularly popular in the forex market, and it looks
to capitalize on minute price changes. The driving
force is quantity. You will look to sell as soon as the
trade becomes profitable. This is a fast-paced and
exciting way to trade, but it can be risky. You need a
high trading probability to even out the low risk vs
reward ratio.

Be on the lookout for volatile instruments, attractive

liquidity, and be hot on timing. You can’t wait for
the market, you need to close losing trades as soon
as possible.

3. Momentum
Popular amongst trading strategies for beginners,
this strategy revolves around acting on news
sources and identifying substantial trending moves
with the support of high volume. There is always at
least one stock that moves around 20-30% each day,
so there’s ample opportunity. You simply hold onto
your position until you see signs of reversal and
then get out.

Alternatively, you can fade the price drop. This way

round your price target is as soon as volume starts
to diminish.

This strategy is simple and effective if used correctly.

However, you must ensure you’re aware of
upcoming news and earnings announcements. Just
a few seconds on each trade will make all the
difference to your end of day profits.
4. Reversal

Although hotly debated and potentially dangerous

when used by beginners, reverse trading is used all
over the world. It’s also known as trend trading, pull
back trending, and a mean reversion strategy.

This strategy defies basic logic as you aim to trade

against the trend. You need to be able to accurately
identify possible pullbacks, plus predict their
strength. To do this effectively you need in-depth
market knowledge and experience.

The ‘daily pivot’ strategy is considered a unique case

of reverse trading, as it centers on buying and
selling the daily low and high pullbacks/reverse.
5. Using Pivot Points

A day trading pivot point strategy can be fantastic

for identifying and acting on critical support and/or
resistance levels. It is particularly useful in the forex
market. In addition, it can be used by range-bound
traders to identify points of entry, while trend and
breakout traders can use pivot points to locate key
levels that need to break for a move to count as a
breakout.