Truth of Day Trading
Truth of Day Trading
w Basic Rule
w Day trading requirement
w Day trading monitoring
w Day trading Caution
w Important strategy for day trader
w Precautions before day trading
w Truth of day trading
w Day Trading Techniques
Most of the new comers to stock market and even some of the experienced traders are not aware of truth of the day trading.
¤ Basic Rule
Day Trading in stock market is all about managing risk, nothing works
100% accurate.
Even if you have a trading system which generates 99% of success,
there is always a certain chance and probability to lose in day trading.
¤ Day Trading Requirement
Day trading requires whole market awareness and try to get latest updates
on stocks, companies and its related news, very important is to get market
direction (either positive or negative).
¤ Day Trading Monitoring
Financial Television channels provide all latest buzz on stocks, news,
markets and companies. This will really helps for day trader to enter and
exit on news based stocks.
¤ Day Trading Caution
Day trading can’t be done based on single technical charting or based on only technical software. Market awareness is
must to exceed in day trading.
There is no any technique or calculation to earn in day trading.
Very importantly - Market experience is required to get success in day trading.
New comers to stock markets should be very careful, but in fact they must avoid it unless and until they gain proper
knowledge.
¤ Important Strategy to Follow by Day Trader
As you are doing day trading you have to book profits on low margins and do multiple trades because you never know
when markets turns back, so book profit and get ready for another trade unless you are 100% sure of the trade and
market direction.
¤ Remember Before you Start your Day Trading
1.Buying and selling or selling and then buying (which are called as short selling) are two basic trades done in
day trading.
2.Before you decide to do any one of the trade you have to find out the direction of the market. - It’s not possible to find
this 100% accurate.
For example - Indian stock markets will open mostly based on the situation on Asian markets and Asian markets in turn
will open based on USA markets.
This is not any hard and fast rule but it is observed most of the time.
¤ Truth of Day Trading
Most of the day traders get success by avoiding over trading.
For example - If you have RS 5000 then brokerage firms provide margin on your amount, means you can trade 4 times
(margin percentage varies from broker to broker) more on your amount. But if you make use of margin amount then you
have to square off your trade before market closes or some brokers provide two days time. This means even if your trade
goes against you, you have to square off in loss.
Now lets see other side - If you day trade only on your amount then there is no restriction for you to square off because
you are not using any margin amount provided by your broker. Now suppose if market turns back and you are in loss then
you can take them in delivery and hold them as long as you wish or till that scrip goes up.
¤ Buy near open price
If possible try to buy shares below open price, or at open price. Don’t buy shares if price is gone very high then open
price, wait for the price to come down near open price and then buy that stock.
¤ Check buying volumes
Before buying check out the buying and selling quantity (volumes). If buying volume started increasing then the stock
may go up.
¤ Check derivative status
If possible try to check out the derivative of the stock which you want to buy. If derivative of that particular stock is
going up with increasing buying volumes then you can immediately grab (buy) that share/stock.
Most of the time it is seen that if the derivative goes up, then its stock or share also goes up.
¤ Wait for the target price to buy
For example, if buy is given at 150.5 then don’t buy below this price, only buy at 150.5 price or slightly higher then
price. Because the given buy price may be the resistance price, if it breaks then share price goes up or else may not
go up above 150.5. So plan to buy at given targeted price, don’t buy below target price.
¤ Strictly maintain Stop Loss
Strictly maintain the given stop losses. This will help you to prevent from huge loss. Suppose, for moment the
share/stock what you bought falls drastically down, then you may end up with huge loss. So always maintain given
stop loss.
“Stop Loss will reduce your loss”.
¤ Down wait for huge profit in single stock
If you are getting some profit and if you notice that is not further moving up (it’s called consolidation) then you have to
sell your share/stock and come out of that trade.
In this manner, you can earn small profit instead of loss then you can do another trade and again earn small profit.
Likewise if you keep earning couple of small profits in a single day then all your small profits will add up to huge profit
amount in a single day.
“Get satisfied in small profit and do multiple trades”.
For further clarification and for free guidance Contact us.
Day Trading Techniques
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