3 professional intraday trading trade mantra and tips

October 18, 2018

Intraday trading trade mantra

Have you ever worked on your mistakes in your life? You might or might not know that same mistakes won’t undo the result you got in past. From my experience, I can tell you the result of the same error will cause you more pain and more loss. When the outcome is a loss of money, it pains a lot. I will try to add valuable steps and tips so that you can learn how to trade and invest in stocks successfully for beginners.

The problem increases when you don’t know what mistakes you have done while doing Intraday trading and what can be the right way to do it correctly? Read this whole article to learn Intraday trading trade mantra.

I will point out some common mistakes in the stock market that a trader makes in Intraday trading. I’ll also try to put trade mantra to convince you the logic and way to be a good trader.

Before starting my steps to explain you a failure and successful trader’s differences. I would like to clear common perception of being an investor and a trader. Deciding to be a trader is the hardest decision you will be taking in your life. If you think investing and trading is the same thing then you are wrong.

In real life, you do trading most of the times while buying goods or services. You go to a bookshop to buy a book; you go to the general store to purchase anything is trading. When you are buying real estate is investing.

Buying for Day to day life need is trading and purchase the home is not something you buy in a hurry. You try to compare with peers and see the future value according to the growth of location and environment.

What is the relation of this real-life example with the stock market? Trading is a repeating process on a fixed span of time. Investing is an opportunity to buy something on a decent price or discounted price (Sometimes the view is doubling or tripling your money on a long-term basis).

Trading (specially Intraday trading) has nothing to do with high or cheap price. In real life you buy toothpaste of specific brand every time because it suits your teeth. In the stock market you trade any stock because it suits your trading style. There must be some questions you might raise. What I mean here by trading style? And what you should choose to become a trader or an investor?

Trading Style can be differentiated on many factors.

  1. Momentum basis.
  2. Trend basis.

Both methods are applicable to Intrday trading and swing trading, Applying this can be a great added value to your trade mantra.

Momentum basis trading

When I talk about the time frame on a speed basis, it means how quickly you want to buy and sell any stock. The quickest method to get the smallest profit from the short moment is scalping. You can multiply the benefit with some stocks. For example, you chase ten paisa moment in 1 to two minutes and buy 10000 shares. Your profit will be 1000 rupees in a few minutes. It is the method of small time frame with the high-speed (momentum) stocks.

The breakout of range can be traded on a slightly higher time frame to get the profit from the gain in momentum.

Trend basis Trading

Trend basis is a prevalent practice in trading like swing trading and retracement trading. Retracement on a previous important zone (support/resistance) and swing trading is the breakout of the corrective phase in trend.

You should choose to become a trader or an investor?

As I discussed earlier, the decision to buy or sell is not that much important in trading as in investing. Trading is a game of risk management and market psychology. If your strategy has 30% accuracy, you can still make money. You have just to predefined your stop loss and target per trade.

Successful trading plan

For example, I am taking 10 trades, and my accuracy is 30%, it means most likely am losing 7 trades, and only 3 trades are making money.

What should be your predefined stop loss and target? I think it is simple math. Say, you want to take 2 rupees exit criteria (When your trade goes 2 rupees against your direction then you close the position). You can also set you exit criteria in %age, let 2%. It means you don’t want to lose more than 2% of your account balance per trade.

As per the accuracy, you should be looking for almost three times your stop loss. Like here your risk is 2 rupees per trade so, your expected profit target per trade should be 6 rupees so that for ten trades(three profit and seven loss) you will be in the gain of 6*3-2*7=18-14=4 rupees(the calculation is based on one share).

Like everyone says trading has success rate of only 5% but for investing it applies opposite because pure investing has success rate of 95%.

Above trade mantra looks like a logic and make sense if applied for a successful Intraday trading plan.

Successful Investing plan

You may say, can you prove me, how investing is less risky as the success rate is 95%.Investing in stocks is a long term game. If you could have invested in Nifty (Nifty is a list of 50 Stocks) stocks for 2-3 years, you were in profit. It’s something you could do without analyzing the stock one by one.

See the screenshot of the nifty chart below. Irrespective of one-day negative return, the long-term gains of nifty from Feb. 2016 to till now is approximately 45%.

You will have to learn Fundamental Analysis of stocks to become a good investor and to become a trader you need to learn basis chart (Technical) analysis, risk management and market psychology. Click on this link to learn the difference between Technical Analysis and Fundamental Analysis.

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