Stock market trading is a risky game. However, if you pay it smartly you can make a lot of money. You need to follow several rules, strategy, and tips rigorously in order to succeed as a day trader in India. The profession of day trading is suitable to you are not that depends on many things including your financial position. If you are a day trader or planning to ride the stock market wave by starting day trading this post is for you. In this post, I will explain the concept of day trading. I will also share 10 Profitable Trading Tips for Day Trader in India
What is Day Trading?
Trading means buying and selling stock on the same day or holding it for short period of time. A person involved in doing this activity is called as a Day Trader.
10 Profitable Trading Tips for Day Trader in India
#1 Play with limited money
As day trading is a risky affair, you should start day trading with limited money. Do not employ more than 3-5% of your equity corpus. If you start trading with entire capital and you lose your money you will be out from market forever.
#2 Knowledge is extremely important
Knowledge is extremely important for day trading business. You should be aware of financial jargon such as put option, call option, delta, stop loss trigger etc. Apart from this, you should also be aware of company financial performance and news trigger associated with the stock.
#3 Bigger is better
A Bigger stock is a better stock. I mean you should select large cap stock for day trading. Trading volume of these type of stocks are high and enough information is available about these types of stock in the market. This will help you to decide your trading move.
#4 Set price target before taking position
This is an extremely important point where almost every trader makes mistake. You should set price target before taking any position. This limits your potential loss and also helps you in controlling your emotion over price change.
#5 Always prefer stop loss
Stop loss is preferable while doing a day trading. Stop loss helps a trader to minimize loss while doing a transaction. Suppose you bought stocks of a company at Rs.500 with a stop loss of Rs.490. When the price falls to Rs.490, the stocks will be sold automatically. Thus you have control over losses.
#6 Always book losses
If you committed a mistake by taking a wrong position and stock is not performing as per your expectation don’t afraid to book losses. Don’t live in the hopes of a turnaround. Try to limit your loss. Never add a stock in losing position.
#7 Say no to penny stock for day trading
Penny stocks are not for the day trader. If you are trader stay away from penny stock. As volume is low a chance of losing money in penny stock is very high.
#8 Keep your eyes on News
Always keep your eyes on the news. The stock market always reacts to the positive and negative news. Avoid dealing in stocks with negative news.
#9 Control your emotion
You need to be a master in controlling your emotions. Discipline and balance on emotion are critical for the success of day trader. Profit earned on your trade should not make you over confident and losses should not scare you. A person who can control emotion can master day trading business.
#10 No overtrading
You should minimize your trading. It is not mandatory that you do trading on a daily basis. Even trading 2-3 times a day is sufficient. You should not do over trading running behind profit or losses.
Day trading is not everyone’s cup of tea. It takes a lot of time to become a professional day trader. You need to practice a lot and develop a skill before starting a stock market trading. Remember rigid discipline and adherence to rules and strategy is a must for the day trader.