Choose Highly Liquid Shares And Invest What You Can Afford To Loose:-
There is much more risk in day trading than to invest in the stocks, so it is better you keep on investing only the sum of money that you can afford to lose.
Rules of Intraday Trading For Making Money
An unexpected movement can clean off your full investment in just a couple of minutes. if it is a leveraged position, you could lose more than you invested. day traders must square their positions at the end of the trading session. this is easy if you are trading in large-cap, index-based stocks, which are very much liquid type of stocks and get traded in large volumes every day. never dabble in mid-cap and small-cap shares, because there the traded volumes are never much large. you could end up holding the shares that have no purchasers at the end of the day.
Research Watch List Thoroughly And Trade Only In 1-2 Scrips At a Time:-
Get as much information as you can on the 6-8 stocks on your day trading watch list. You should know about all corporate actions that come up ahead like the stock splits, bonuses, dividends, result dates and mergers, etc as well as the technical levels of the stock market You need to diversify your portfolio when you are investing in the stocks, but when it comes to day trading, you need to confine yourself to just one or two stocks.
You can have eight to ten large-cap, index-based stocks on your watch list, but never be trading in more than two to three stocks at a time. Stock movements always need to be tracked closely by the day trader and you would not be able to monitor more than two or three stocks at a time.
Use Stop Losses To Contain Impact And Fix Entry Price And Target Levels:-
A trigger like way for selling the shares if the price moves larger than a decided limit when you want to sale it. that keeps on helping the purchaser fix the limit on the losses he achieved in the case of the share beliefs, what he expected and moves lower than it. A stop loss takes the emotions out of the decision to sell it off Before purchasing it you need to fix up the cost of your entry and the level of the target. Purchaser psychology keeps on changing after the stock has been purchased. that could interfere with his judgement and poke him into sell it much faster even when the cost moves upwards with a margin.
This may make him pay the opportunity to make full profit from the upside direction. Setting yourself a money target to grab and be abiding by it, your psychological frame doesn’t change at all.