Basic Rules of Intraday Trading
Most traders of the beginners lose money in intraday forex trading because of the high volatility of the markets. Losses occur due to fear or greed because, while investment is not risky, the lack of knowledge is. Below are few basic rules of intraday trading.
7 Basic Rules of Intraday Trading
1. Timing the Market
Experts often recommend individuals avoid trading during the first hour, once the markets open. Taking positions between noon and 1 pm can increase the possibility of earning profits (Increase Profits).
2. Plan Investment Strategy and Stick to it
Every time users initiate a trade and it is important for them to have a clear plan of how to do intraday trading. Determining the entry and exit prices before opening the trade is crucial. One of the most important forex intraday trading tips is to use the stop loss trigger to reduce the potential loss of the position. Moreover, once the stock achieves the target price, users are advised to close their position, and not be greedy and expect higher profits.
3. Exiting the Position under Unfavorable Conditions
For trades that provide profits and price-give reversal, it is prudent to book the profits and exit open position. Also, if the conditions are not favorable to the position, it is advisable to immediately exit and not await the stop-loss trigger to be activated. It will help traders reduce their losses.
4. Invest Small Amounts that Won’t Pinch
It is not surprising for beginners to get carried away once they make some profits during day trading. However, markets are volatile and predicting the trends is not easy even for seasoned professionals. In such situations, beginners can easily lose all their investments. This is why an important intraday tip is to invest smaller sums that a user can afford to lose. It will ensure individuals do not face financial difficulties in case the markets do not favor them.
Before starting intraday trading, it is recommended to understand the basics of the forex market and the fundamental and technical analyses. There are numbers of research available on the online and taking the time to read it will be advantageous.
6. Always Close All Open Positions
Some traders may get tempted to take delivery of their positions in case their targets are not achieved. It is one of the biggest errors, and it is crucial to close all the open positions even if traders have to book a loss.
7. Spend Time
Day trading is not for the professionals who are employed in a full-time job. Traders must be able to monitor the market movements throughout the market session to enable them to make the right calls as required.