Wondering how to become a successful day trader? Intraday trading in our country received a massive boost post the introduction of rolling settlements in the year 2001 and onwards.
Under the T+2 rolling settlement system, whenever you purchase or sell stocks, you will have an opportunity of covering the position on the very same day itself.
If you do not do this, you will have to either mandatorily take delivery of your shares or provide delivery of the same. Intraday traders now prefer not to disturb their Demat accounts since they are usually squared off and net positions remain at zero.
You can purchase and sell any stock by the end of the trading day or buy back shares after selling them on the same trading day as well. Intraday trading is a play which is leveraged, i.e. your brokerage will allow you to adopt trading positions which are multiples of margin money in trading accounts.
It is riskier and if you were thinking about what it takes to be a day trader, you should know that it needs several skills and abilities different from delivery trading. For your share market investment, you will have a broker executing the trade in the market and choosing the brokerage wisely is highly recommended.
When choosing a brokerage, you can choose from various types of agents, firms, brokerages and online trading apps/platforms which are more transparent and easy to register with.
Speed of trade execution is a key factor for the brokerage or platform/app that you trade with along with the overall fees, i.e. costs, commissions and other charges.
Regulatory compliance is a must along with readily available customer support, guidance, knowledge and assistance.
Groww is one of the renowned mobile apps that helps you with intraday trading and you can sign up in a hassle-free manner. On that note, here’s taking a look at the things that you need to imbibe for becoming a successful trader.
Successful steps towards becoming a day trader
For attaining success in intraday trading, you should keep the below-mentioned pointers carefully in mind.
Risk management
Successful traders emphasize on risk management, particularly when leveraged positions are being run by them on a trading day. Successful traders believe that risk is basically what you can control yourself, not the returns. As a result, managing risks should be your focus above everything else.
These traders have stringent limits fixed for the depletion of capital throughout the day, month and so on. They also have a habit of making sure that each trade is supported by a strict stop loss as well.
And They do not enter trading positions without the maximum loss being defined clearly for the trade. They also stay out whenever the markets become too complex or hard to understand.
Learning quickly from mistakes
Successful day traders rarely make mistakes but when they do and big ones at that, they ensure that they quickly learn from the same in order to prevent future glitches. They learn from mistakes quickly and do not repeat any erroneous strategies.
There are scenarios where stop losses may be consecutively triggered and smart traders may simply analyze the core reason behind the same and take immediate action promptly. They emphasize on lessons learnt even if they lose money through wrongful strategies/decisions.
Impeccable Execution
Execution of the trade makes a major difference when it comes to overall performance and this is applicable mostly in case of intraday trade. Smart traders are swift to adopt phased approaches towards purchasing whenever markets get more volatile.
They also make use of market orders and restrict the same for optimization of trade prices and for getting the best market deals. These traders make use of technical charts for lowering risks by purchasing near support levels and selling near resistance levels as well. The emphasis here is on lowering execution and other statutory costs as much as possible.
Positive risk-return trade-offs
Targets linked to profit should be a major function of the risk entailed via stop losses. For instance, you can never have a negative risk-return trade-off.
Successful day traders make sure that they adopt positive risk-return trade-offs, making sure that profit targets for trades are risk multiples and calibrate stop losses likewise along with return goals. Successful traders will always use positive risk-return trade-offs as major criteria for undertaking daily trades in the market.
Practical Expectations
Successful traders always have practical and realistic expectations. Chasing improbable and unreal profits/returns based on impractical expectations is not something that is recommended.
Successful traders know that returns are always linked to risks and there are no risk-free trades available in the market. They always have more practical expectations which are more in sync with market realities.
Not beating up markets
Successful traders do not usually adopt contrarian market positions or beat up the market. You may try this occasionally for limited success although seasoned and experienced intraday traders will always go with the market momentum.
They will never try to forecast or surpass market performance while emphasizing on underlying market trends and trading likewise. Remaining humble is the key to success.
Discipline is a big virtue
There are no traders who are successful and undisciplined. Remember that discipline is a huge virtue and you should set your trading limit/plan accordingly, have a backup action blueprint and undertake your trades. Discipline is a way of life and core habit for successful day traders.
Follow the above-mentioned tips in order to become a successful day trader in India.
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