Trading in the financial markets is a dynamic and challenging endeavor, especially when it comes to intraday trading. Intraday trading, or day trading, involves buying and selling financial instruments within the same trading day. This fast-paced style of trading requires a deep understanding of market movements, quick decision-making, and strict discipline.
Here are the seven most important rules of intraday trading
(1) State of Mind:–
Your mind plays a vital role in any type of trading, including intraday trading as well. It’s the most important thing that needs to be taken care of before starting your trading career . Your mind must be in a calm state, and not any kind of hurry should be entertained in day trading because it may cause a very big loss that you never imagined yet. So before taking first trade of the day ,your mind must be relaxed and calm.
(2) Fix the drowdown limit:–
You must know in advance what the maximum loss you can afford in a day . The loss amount is an amount that does not disturb your mind to the extent that it causes anxiety and a state of fear in your heart while tapping the trade button next time. Fix your stop loss amount (a loss amount that you will take when a trade does not go in your favor).
(3) Focus on the Risk-to-Reward ratio:-
The risk-to ratio means how much potential profit a trader could make for each penny they are willing to lose in a trade. The minimum RR ratio must be 1:1 (e.g., either a trader makes Rs. 10000 or loses Rs. 1000) for any trade.
(4) Number of trades:-
The number of trades execution in a day must be fixed for a trader to be a profitable trader. It’s always beneficial for a trader not to execute so many trades in a day. The greater the exposure to the market, the higher the chances of making a loss then. Fix the number of trades (e.g., a maximum of 2 or 3 trades in a day).
(5) Position Size:-
Your position size should be in accordance with your total trading amount. It is always preferred to use a maximum of 10 percent of your trading amount in a single trade. You must be able to take a minimum of 15 trades with the same position size in a row while losing in every trade. Trust me, if you take position size by following these rules, you will not be able to blow your trading account.
(6) Discipline and Patience:-
Be disciplined by following your trading plan and sticking to your predefined trading strategies. Be patient and calm, and avoid the temptation to chase the market. Take the trade as per your strategy with a good RR ratio. Always remember that taking no trade is also a good trade.
(7) Manage Emotions:-
Keep your emotions such as fear and greed, in control. Emotional decision-making can lead to over trading and trading losses. Maintain a trading journal and review it every week via doing this you will able to track your trading strategy results and your emotional mistakes you have done in past while executing the trade.
Intraday trading is challenging and requires continuous learning and a disciplined approach. Always be prepared for both winning and losing streaks. Be patient,Be calm.