Why intraday trading is difficult for beginners
Day trading looks pretty easy on paper. All you have to do is buy a stock in the morning and sell it off by the evening. What’s more? You can make good money in between. But now is the time to burst this bubble: this mode of trading is not exactly a cakewalk. In reality, you need a lot of preparation and intimate knowledge of the market. Day trading for beginners can be a struggle in the initial stages.
Of course, you can get handsome returns from intraday trading. It is important to know the risks that could lead to losses. Having a solid trading plan and strategy do not hurt your prospects either.
Types of day traders
There are primarily two types of day traders: professional traders and individual traders.
The professional trader works with trusted brokerage agencies. These agencies provide them with the latest technological support, a knowledge base, and research material. All these tools help this type of trader to take the right intraday trading decision at the right time.
The individual day trader has limited resources. So, they are more vulnerable to market changes. They should make use of online resources to understand the rules and workings of the stock market.
If you need help with day trading for beginners, start by opening a trading account with a reputed brokerage firm like Kotak securities.
Why beginners fail at day trading
- Absence of a trading plan: It is important to have a solid trading plan in place. You have to formulate a trading strategy. A robust strategy that is applicable to all market conditions is the need of the day. An effective strategy helps the trader prepare for action even before the trade starts. Day traders must evaluate the amount of risk they are willing to take. They should also consider factors like entry and exit prices, back-up resources, and so on.
- Practice, practice, practice: A beginner might not instantly make money from intraday trading. They must sharpen their trading skills before mastering them. A good way to practice is to trade with fictional shares. This way, you will not lose out on money while learning how day trading works.
- Using the stop loss technique: Adding a stop loss to your trades is a great way to cut losses. It helps you to avoid big losses and get out of a bad trade. Unfortunately, most traders, including beginners, tend to skip this step.
- Controlling emotions: It is important to keep your emotions under control. Fear or greed clouds the day trader’s judgement. A little success can distract traders from the established intraday trading path. Similarly, the fear of loss may prevent them from making the most of an opportunity.
Last but not least
To understand how the stock market works, one needs to study the market. A successful trader needs money to trade, resources to study market trends, and disciplined trading habits. Since day trading is done over a very short period of time, it can make life difficult for newbies. They have to be alert. It is wise to move out if the profit targets are met or the trades slow down.