Why You’ll Never Succeed at How to Earn From Intraday Trading

After Corona disaster , many people including you understood the importance of having an extra source of income and stepped into the world of stock market trading and also they are curious to know how to earn from intraday trading

 I am sure you might have understood the potential and earning opportunity that is available in the stock market by seeing the profit screenshots of the successful intraday traders through the various social media platforms like Instagram and YouTube in India . 

But the shocking and interesting fact is that only 1% of the intraday traders in the stock market make more returns than Bank Fixed deposit returns over the three-year period of time. 

Because We don’t know how do people make money in the stock market and Repeatedly making the same series of mistakes will prevent you from becoming a successful trader . 

I have been into trading for the past few years and successfully able to generate far better returns than bank fixed deposits. Not only that, I have got a chance to interact and learn from many successful intraday traders in India.

From those learnings and the experiences which I have got through my trading journey , I have understood the four major pillars of intraday trading which will help you to make money daily in intraday trading.

So we are going to see those four important pillars of intraday trading that separates 1% successful intraday traders from the rest of the traders. If you want to know how to earn from  intraday trading  , then this article is for you.

1. Risk management in trading:

First of all we all should understand that stock market trading is the world of winning percentage and risk-rewards . Higher the RISK you take and higher the REWARDS you gain .

Risk management in trading  is the process of managing the risk you take in each trade and maximising the rewards by using price action strategies . In the Stock market world , we call it the risk reward ratio . We use a mantra to get higher risk reward ratio ie

“Cut your losses short and let your winners run “

To explain this , let’s take a scenario where The Risk reward ratio is 1:5 means , for every one rupee you risk , you gain five rupees . In this case , if the trade is going against us we lose 1% of the capital and if the trade goes in our predicted direction we win 5% of total capital .

Now for you to become successful intraday trader atleast you should have the risk reward ratio of 1:2 with the winning percentage of 50% I.e ( out of ten trades you take, you should win five times ) .

So risk management is all about minimising and cutting the losses when the trade goes against us. I would advise you all to keep the maximum 2% risk per day of your total capital while doing intraday trading. If suppose your total capital is one lakh rupees , then on any given day your maximum loss should be less than Two thousand rupees only.

So the First and foremost step to become successful in intraday trading Is to learn risk management and apply it . Next comes the winning percentage of each trade , that we are gonna discuss below .

2 .Well backtested and best intraday trading strategy 

Here the best intraday trading strategy is nothing but the predefined set of rules for entry , target , stop loss , timeframes , indicators , price action technique used to make money daily in the stock market.

To elaborate this better for your understanding:

Entry price :

It is price level where we initiate our entry let’s take buying or selling in a trade

Target and stop loss :

Once the entry Triggered it can either go to our target or our stop loss. Target is the price level where we will book the profits whereas stop loss is the price level where we will book our losses

Timeframes :

Since the time available to make decisions for entry and Stop loss in intraday is very low , we should always have a predefined time frame to trade intraday . The best timeframe many successful traders use in intraday is five minutes candle.

Indicators :

There are many trading indicators available in the market to give mathematical signals . Some of the best indicator for intraday trading in nse  are volume chart , moving averages , Vwap , bollinger bands and rsi .

Price action :

The most important element to become successful in intraday trading is mastering the price action which comes under technical analysis of the stock market.

To put it in simpler words , the historical past data of price is going to repeat itself in the market again and again . Based on this fact , we can understand The behaviour of price through chart patterns, candlestick patterns, trend lines , support and resistance areas .

For you to have a successful intraday strategy , you have two options

1. To create it by spending hours of time in the stock market and create defined rules based on the price action which works.

2. You can learn from an successful intraday trader who created the strategy and also using it to make money daily in intraday trading

3. Solid psychology in trading

Intraday price movement in the stock market majorly depends on human emotions like fear and greed. In order to become a successful trader we should learn to control our emotions while trading .

“Plan the trade and trade the plan”

Planning the trade is applying the well backtested strategy and trading The plan is all about following the plan without letting our emotions into it.

As a human being , we are born with emotions but you should learn to control it otherwise you end up in losing your capital by over-trading and fear of missing out .

Over trading or Revenge trading :

When our sl is hit on any day , we should stop trading for that day and wait for the next day to come. But what we try to do is to recover the losses by trading again and again even though the daily risk limit is over . This is called over trading

Fear of missing out :

Even though We know where to place our entry and exit . We don’t wait for the level to come because of the fear of missing out and make blenders. This also indicates that you are not having a solid mindset to trade in the stock market.

4. Intraday trading journal

It is used to track the progress of your trading journey by journaling all the trades you take in the stock market . It is noted that all people who make consistent money from intraday trading are having an intraday trading journal .

How you can create a trading journal is by including the entry price , exit price , profit or loss in that trade , strategy used , description  and mistakes you made in a day . This can help you analyse the mistakes and become a better trader .

In the stock market , you can make money by outperforming all the other fellow traders . So it is very important to have a trading journal and become better day by day .

Conclusion for how to earn from intraday trading :

In the real world , practice makes you perfect, but in the stock market world practice only makes you a better trader . As there is no perfect trader that exists in the stock market who makes money in all the trades he executes .

The highest Profits and returns you can make in the stock market is through intraday trading . Successful intraday traders make minimum 10% to 25% return per month consistently i.e. 120% per year whereas bank fixed deposit is only 5% per year . Now you can understand the potential of it .

On the other hand , Intraday trading is like executing an open heart surgery where you need proper education , experience and mindset . But once you have mastered all these four aspects of intraday trading , nobody can stop you from ruling the financial world .

Start to learn trading from scratch now and chase the abundance of money which is available in the stock market trading .

Happy trading to you all . All the best for your intraday trading journey .

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