1. Use surplus money – Trading should be done only with the spare money,the money you don’t need and can afford to loose.Trading,although very profitable,is associated with substantial risk.
2. Do proper research – Before taking trade,proper research should be done about the stock or the index ,using charts based technical analysis.It helps in determining important levels of the stock,strength and trend of the stock.
3. Use of Stop loss – This is very important part of any kind of trading.Most of the traders don’t use it,knowingly or unknowingly and end up taking huge losses.Stop loss helps cutting short the losses and keeping emotions out of trading thereby protecting capital.Remember,capital protection is more important than earning profits.Profit earning opportunities keep on arising in the markets which you can use if keep your capital protected.
4. Don’t overtrade – Over trading is suicidal.More trades become difficult to manage.So trade only that quantity you are comfortable with.Keep number of trades limited to 2-3.If one trade gave you sufficient profit,better close the system and do some other work or relax.Choose your trades on the basis of Risk Reward Ratio.
5. Be disciplined – This is the major quality of the successful traders.Avoiding overtrading,not fighting against the trend and cutting short losses and keeping fear and greed emotions out of the trading are some important steps.
6. Follow the Trend – To have a higher success rate in Intraday Trading,always remember ‘Trend is your Friend’.So,always follow the trend and trade in that direction only.In up trending markets,select stocks which are strong on charts and have long positions.In down trending markets,select the weaker stocks and short them.Never trade against the trend.The advantage of trading with the trend is that even if you take a wrong call,you will not suffer big losses.
7. Liquidity – Always try to trade in highly liquid shares.Liquidity is the volume of shares traded.In liquid stocks,it is easy to enter and exit the trade and you enter or exit the trade near the last traded price.
8. Profit taking – Exit Strategy is really important.Take your profits and get out of the market when your target are achieved.Letting the profits run beyond targets leads to greed which is dangerous for trading.You never know when the market will turn around and throw you in losses after eating all the profit.
Cutting losses is also important part of successful trading.Exit your position if market is not going the way you anticipated.Don’t be stubborn and let the market do what it wants to do.