What are the Common Day Trading Mistakes which can be avoided?
Most beginners start their trading journey with intraday trading. Day trading appears attractive as it gives lots of trading prospect over the day and also assures a peaceful sleep as you do not carry any positions overnight.
Meanwhile, Day trading is not only expensive but also very risky. Most traders end up overtrading when they day trade and make mistakes as they have a number of open positions and very less time to act.
Before commencing your trade based on trading guidelines, you should look to shun these common errors that day traders commit.
Have a trading plan:
A trading plan is a necessity when you are stock trading. Although your broking house provides day trading tips, it is essential that you have a trading plan of your own.
Be prepared for loss:
When traders do online stock trading, they only focus on the buy and the sell price of a stock.
On the other hand, if the stock does not move in their support they alarm. This leads to overtrading just to cover the loss which only adds to the losses. It is necessary to be prepared to accept losses when you trade.
Shun trading on news days:
Do not trade on Budget or economic news broadcasting days as it leads to a lot of unpredictability in the market.
Do not keep changing your strategy:
Most traders will change their trading strategy if they have a sole loss. This should be avoided as it is not the way things turn out to be.
Stay up-to-datewith the news:
Being up to date with the current financial news is vital as, traders are so busy getting tips.
Examine your trades:
After the day is over, sit for some time and examine your mistakes and see where you went wrong.
Maintain trading journals. Traders do not keep a journal of their trades which does not let them evaluate their trades at a later date. A trading journal is a must to observe your success and losses.
Carry forward day trades:
If your plan is to only day trade then square off the position at the end of the trading day, whether it is a profit or a loss.
Most beginners will start day trading but if their objective is not met, they end up keeping the shares in the anticipation that it will reach their target someday.
Stop loss should be strictly maintained on all trades. It defends your capital from being washed out completely.
Wait for the trade:
Wait and allow a trade formation without jumping into any trade.