If you are making net losses in intraday, you have to improve your trading strategies rather than continue making losses. Loss can be controlled and minimized but nobody can avoid losses in Intraday.
When the market is stable, you may earn some money which will give you confidence but profit is not consistent for even experienced players. Your loss amount will be always higher than the profit amount for newcomers and in this way they end up losing their initial capital.
There are several reasons possible behind your losses. Here are the best solutions to minimize losses in intraday trading.
- Stock selection: You have to select only A group stock while trading for intraday which has good volumes. Never select very high volatile stock (due to fewer volumes), Select less volatile and stable stock for intraday which gives movement with market. It’s preferable if you trade in Nifty 50 stocks only.
- Risk Management: Risk plays a big role in intraday trading. It’s not necessary that you will get profit everyday or your all trades are right so you have to stop your losses somewhere and for that Stop-loss is MUST. You should apply a calculative stop-loss to overcome your risk. If you are aiming for 10 Rs target, you should put 3 to 4 Rs stoploss.Remember , stop loss should be place at a logical point where there is possibility of buying to emerge, example stop loss is below today’s low.
- Market trend: You have to identify market or Nifty trend before entering into any intraday trade. You are not supposed to buy any stock because it has fallen much or you are not supposed to sell a stock because it has risen too much. Identify market trend and go with trend only. Trend will help you to select stocks for intraday trading .
- Overtrading: Never prefer too many trades in intraday. Just do 1–2 trades which can give you enough money for intraday. You can’t be millionaire in a day so never try to do too many trades in which you can’t concentrate.
- Emotions: You have to control your emotions to avoid losses in Intraday trading. Emotions makes you hold your losing trade and once loss will be increased, you won’t be able to exit in big loss. So control your emotions while trading and be practical while trading. Small loss can be covered in next trade but if it becomes bigger, you can’t survive with low capital.
- Never Average: People average their losing position which makes it worst to exit because if you double the quantity, risk will be doubled too and you won’t be able to book loss which can vanish your whole capital. Never average losing trade. Just cut the loss and move forward.
- Follow Basic technical: if any stock is not breaking it’s previous day’s low and showing strength in intraday irrespective of market movement, it can be bought with previous day’s low Stop-loss. Same way on selling side.
- Buy on Support and Sell on Resistance: This is a basic thumb rule for intraday trading that you have to buy strong stocks at support for intraday and sell weak stocks at resistance. Now the question is how to find support or resistance. Usually yesterday’s high and low, intraday pivot points, Moving averages like 20EMA etc.
- Open low brokerage Demat account online: This is especially true because if your broker charges high brokerage, you will be unwilling to square-off your positions on cost price as well. For example, if you buy 500 shares of stock x @400 rs, you know that unless you sell @ 402 rs, you will not get anything. As brokerage and other taxes will be 700-800 rs. Hence you must open the cheapest and best demat account online for saving brokerage. To open a zero brokerage account , click here.