|
Day Trading Precautions
1. If you
are new comer to share market
2. When you have a strong mind set (especially new comers to share market)
that you want to earn big amount of money very fast in single day.
3. Not confident and not sure
4. Not able to judge market
5. No good mind frame
6. When market opens and closes (especially few are new comers).
7. When shares and markets are trading in very narrow range.
8. Impatience, Greed and Fear
If you
are new comer to share market
New
comers to share market should avoid day trading. They should study entire market
like important terms, global markets, share movements and should acquire lots of
information and then start doing paper trading practice before actual starting
the day trading.
If you have mindset
that you want to earn fast money and in that also in single day
We have heard that most of the people come to share
market or to day trading to earn fast money and in single day.
According to our
experience it is not possible to achieve this type of success because share
market is not gambling.
And if people continue trading by keeping same mind set then it is risky and
chances are there that they may loose money..
Share market or day trading is not where you have to test you luck but in fact
it requires the systematic approach by studying the various factors and
parameters.
Not
confident and not sure
If you are not confident and you are getting felling of losing money then don’t
do day trading.
The fear of loss of money comes to mind if you don’t have proper knowledge of
the product and the system.
So don’t continue trading.
First gain all necessary information and start working on paper trading practice
and try to gain profit in paper trading because this will boost your confidence
and then you can plan to do actual trading.
Not
able to judge the market direction
It happens many times that even experience traders or analysts are not able to
judge the market direction due to various reasons like impact of global markets,
domestic circumstances and many more.
So it is recommended avoid trading if you are not able to judge the market
trading take break for some time and then try to analyze.
If you have good patience then you can sit and watch the trading terminal and
wait for right opportunity and if you don’t have patience then take break.
No
good mind frame
Mind frame plays very important role in day trading but in fact even in
investing.
Success (profit) failure (loss) depends how you react to current market
situation.
If you are in angry or upset mood then it is risky to do day trading, so avoid
trading for that day for that time.
Even if you are feeling uncomfortable then also it is recommended to stop
trading and take break for a while or for entire day.
Money saved is money earned.
When
market opens and closes
Market opens at 9:00 am and closes at 3:30 pm.
During this period mostly 20 to 30 minutes tolerance the trading happens very
unexpectedly due to participation of big players/traders due to which market
becomes indecisive for some time so if you are new or don’t have enough
experience to judge the market status then trading should be avoided.
When
market is moving in narrow range
It has been observed that some times market neither goes up nor it moves down it
just oscillates (moves up and down) in very small narrow range due to which it
becomes very difficult to take analyze the market and take the trading decision.
At the same time it becomes very difficult to judge the specific stock movement
whether the stock price is going up or moving down.
So in such circumstances apply wait and watch strategy and only trade when
market moves in any one particular direction don’t try
to do forceful trades by predicting the market direction.
Impatience, Greed and Fear
If you have high influence of greed and fear then first you should work out to
reduce the intensity of these two factors because these two factors are
considered as enemies for day traders and also for investors.
Impatience is another important factor which makes you to panic and take
inappropriate decisions while trading. So avoid becoming impatience and having
enough patience which is prime requirement for day trading. |
