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Top 10 Intraday Trading Rules For Day Traders

If you are going to day trade, it’s essential that you have a set of rules to manage any possible scenario. Best intraday trading tips and rules for you to become a great day trader and to help you avoid common trading mistakes. Intraday trading is intensive and risky, but can potentially be very profitable. Here are some guidelines for picking the best day trading stocks, and how to get in and out of them with a profit

Day trading can be profitable in the long run for traders who take it seriously and do their research. Day trading is a job, not a hobby; treat it as such be diligent, focused, objective, and keep emotions out of it. Intraday traders, or day traders, are individuals who buy and sell securities within the same day. They capitalize on short-term price changes in order to make a profit. In order to be successful, day traders must select stocks that are liquid, have mid to high volatility, and are followed by a group of investors. To identify the right stocks for intraday trading, it is necessary to isolate the current market trend and ignore any surrounding noise. This will allow you to capitalize on the trend and make a profit.

Knowledge Is Power

In addition to knowledge of basic trading procedures, day traders need to keep up on the latest stock market news and events that affect stocks the Fed’s interest rate plans, Indian RBI Repo rate,  the economic outlook, etc. So do your homework. Make a wish list of stocks you’d like to trade and keep yourself informed about the selected companies and general markets. Scan business news and visit Equityx.in Share Market Advisor

Start Small

If you’re just starting out, focus on one to two stocks during each session. It’s easier to track opportunities and find profitable investments when you’re not spread too thin. Recently, fractional shares have become more common, so you can specify smaller dollar amounts that you want to invest. This can be a great way to get started without putting all of your eggs in one basket.
That means if Apple shares are trading at $250 and you only want to buy $50 worth, many brokers will now let you purchase one-fifth of a share.

Avoid Penny Stocks

When it comes to investing, you’ll want to stay away from penny stocks. These stocks are often illiquid and the chances of seeing a return on your investment are often slim. Instead, look for deals and low prices on stocks that are more likely to be liquid and have a higher chance of providing you with a return.
Avoid penny stocks. They are typically de-listed from major exchanges and only traded over-the-counter (OTC). You need to see a real opportunity and have done your research.

Time Those Trades

Many investors and traders place orders that begin to execute as soon as the markets open, which can result in price changes (volatility). A more experienced player may be able to recognize patterns and make appropriate decisions to turn a profit. However, for those new to the game, it may be better to sit on the sidelines for the first 15-20 minutes and simply observe the market before making any moves. The middle hours of the day are usually less volatile, and then activity begins to pick up again as we get closer to the closing bell. Though the rush hours offer opportunities, it’s safer for beginners to avoid them at first.

Be Patient and Wait for the Pullback

Trendlines are a great tool for visualizing where price waves will begin and end, which is extremely helpful for intraday traders who want to get an early start on the next price wave. When selecting stocks for intraday trading, be sure to keep an eye out for trendlines so you can take advantage of the next price movement!
When you’re entering a long position, you want to buy after the price moves down toward the trendline and then back up again. To draw an upward trendline, you need two price lows – one higher than the other. Connect these two points with a line, and then extend it out to the right. On the chart below, you can see that the price bounces off the trendline a few times before finally breaking through it on the third try.

Being patient and waiting for the perfect opportunity to come along can be difficult, but in trading, it’s what separates the wheat from the chaff. These two long trades provide a low-risk entry by being patient and waiting for the price to dip close to the stop-loss level. The stop-loss level would be placed a few cents below the trendline or the most recent price low made just prior to entry. As mentioned previously, no trend continues indefinitely, so there will be losing trades. But as long as an overall profit is made – even with the losses – that is what matters in the end.

Cut Losses With Limit Orders

Decide what type of orders you’ll use to enter and exit trades. Will you use market orders or limit orders ? When you place a market order, it’s executed at the best price available at the time thus, no price guarantee.
Meanwhile, a limit order helps you trade with more precision by setting your buying and selling price (something that is executable and not too unrealistic). More experienced day traders may use options to hedge their positions.

Trend following

Trend following, or momentum trading, is a strategy in which traders capitalize on the continuance of financial instrument price trends. Traders buy a rising instrument or short sell a falling one in order to profit from the continuation of the trend. Technical analysis is used by these traders to identify these trends.

Set Aside Time, Too

When you’re assessing how much capital to risk on each trade, always remember that less is more. Many successful day traders only risk 1-2% of their total account per trade. So, if you have a $40,000 trading account, you should be willing to risk no more than $400 per trade.

Of course, there’s always a chance you could lose the money you invest – but that’s why it’s important to set aside a surplus amount of funds that you’re prepared to lose. That way, even if things don’t go your way, you won’t be left completely broke.

Set Aside Funds

When you’re assessing how much capital to risk on each trade, always remember that less is more. Many successful day traders only risk 1-2% of their total account per trade. So, if you have a $40,000 trading account, you should be willing to risk no more than $400 per trade.

Of course, there’s always a chance you could lose the money you invest – but that’s why it’s important to set aside a surplus amount of funds that you’re prepared to lose. That way, even if things don’t go your way, you won’t be left completely broke.

Avoid trading during the first 15 minutes of the market open

Those first 15 minutes of market action are often panic trades or market orders placed the night before. Novice day traders should avoid this time period while also looking for reversals. If you’re looking to make quick profits, it’s best to wait a while until you’re able to spot rewarding opportunities.

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