Trading in the stock market you can make lots of money, but at the same time, any kind of mistake can cost you more and you can lose your money. And intraday trading is one of the riskiest practices, you can either earn or lose money in a single day.
Most traders lose their money inday trading due to taking the wrong decisions or mistakes that should be avoided. To make your trading experience more profitable and risk-free we brought here the top seven very common mistakes that you need to avoid while doing intraday trading with tips on how to avoid these mistakes and earn more profits.
7 Most Common Trading Mistakes to Avoid
1. Not Using Technical Analysis
You can't imagine, trading without technical analysis – which is playing a vital role in taking decisions while buying or selling stocks for day trading or investing for a few days. Several indicators are used in technical analysis to analyse the stock and whether it is currently suitable for buying or selling with the right price levels to book profits.
In technical analysis, certain tools and techniques help to identify the stocks having potential. Candlestick chart patterns, RSI, Moving Averages, Bollinger Band, Volume Analysis and similar many more indicators are used in technical analysis. Not using technical analysis is one of the biggest mistakes traders do during intraday trading.
2. Picking the Illiquid Stocks
Picking an illiquid stock for intraday trading is another biggest mistake, trader do. The liquidity of a stock is an important factor for the price movement during the day, if there are no sufficient buyers or sellers in the stock, it would be difficult to book profits.
If you bought an illiquid stock for intraday trading and the end of the day when try to sell the same stock, but if there is no buyer, then what will you do with that stock? In such a situation, you have to take the delivery of that stock and wait till you find the buyer. Hence, for intraday trading, you should always choose stocks highly liquid in the stock market.
- Buying Stocks with No Volume
Just like liquidity, the volume of trade in the stock is another factor, you should consider at the time of picking the stocks for intraday trading. Again if there are not enough buyers and sellers in the market or several trades not taking place, in particular, any stock, it would be difficult to book profit or exit from such stocks you have created the positions.
When stock consistently moves in any direction without any unusual patterns, means there is huge volume in the stock that is pushing the same in that direction. Thus, for intraday trading never do the mistake of choosing a stock with low volume.
- Trading Against the Market Trend
Swimming against the waves is not only difficult but it may cause you trouble. Similarly, making positions in stocks against the market trend can cost you a loss. And this rule especially applies to intraday trading, where you have one day to exit.
If the market is uptrend try to make a long position in the potential stocks. While, when the market is downtrend, sell the stocks that are weak or have high beta as such stocks react faster than the main index or compare to other stocks in the same index.
Though some stocks move against the market trend due to company-specific news, still trading against the market trend is one of the biggest mistakes traders should avoid to minimize their losses and maximize the profits from the stock markets. Not only the domestic markets, but while intraday trading also check the trend of the major global market indices.
- Trading Without Using the Stop Loss
This is another one of the most common trading mistakesmany people do while trading in the stock market. Using the stop loss while putting the orders helps to protect the traders from extraordinary losses that usually occur due to trend reversal.
With the help of technical indicators tools and techniques like nearest support & resistance on the chart, you can put a stop loss. When you put stop loss, and the market or stock moves against your expectations, especially when you make a position in short selling then at this point orders are executed automatically. This stop lossbacked orders protect you from further loss that you might incur if the stock is breakout or breakdown and rising without the circuit limit.
During intraday tradingnever trade without stopping loss, it not only helps you from unexpected losses but also makesyou free to focus on the other stocks. As intraday traders are always in the quest to earn more profit because of their high-risk appetite.
- Being Highly Emotional or Pessimistic
This is also one of the very common mistakes traders do while trading in the stock market. Playing in the stock market is the game of making or losing money. And while playing this game, getting too attached to the profits or losses is not good.
Becoming emotional in such situations can not only affect your personal life but also make you depressed. This kind of emotional attachment and negative attitude towards the stock markets also makes it difficult for traders to make the right decisions next time. So, always keep the emotions aside and let the losses never come your way in trading.
- Becoming Addicted to Trading
Addiction to anything is not good for anyone whether it is trading practice in the stock market or anything else. Few people make trading an obsession, and they use to trade every day in stocks, currencies or cryptocurrency whether the market is favourable or not. This kind of addiction is not good, as sometimes the market is highly volatile, and then you should avoid it.
And more rule while trading in the stock market, that is if you have earned the profits in your first or second trades, you should stop further trading. Because just like gambling, next time you can lose your money and your entire profits can go away. Two to four trades in a day for intraday trading is enough and you should take a break for the rest of the day.
These are the very common mistakes to avoid when trading stocksso that you can earn maximum profits and minimize your losses. However, there is no guarantee you will not lose your money if you avoid these mistakes, but it will help you to take the right decisions while trading in the stock market and make maximum money from this.
And the best way to avoid such mistakes in trading is to take advice or help from market experts. Technical analysts are well-trained experts who know very well how to trade safely and make the right positions in the stocks. If you are an inexperienced trader and looking to trade intraday, you must take help from such experts to avoid such mistakes.
The market experts use advanced indicators, tools and techniques to screen the best stocks and recommend the same to clients with stop loss and other tips. Trading with experts will not only maximize your profits but also help you to trade with market rules and regulations safeguarding your investments from unexpected market moves.
Moneysukh is the leading broker in India, providing the one-stop trading solution to all types of people looking to invest in the stock market, commodities or forex market. A team of well-qualified and experienced experts work here at Moneysukh using advanced tools and techniques to understand the market heat mapand pick the right stocks.
If you are looking to invest or trade in equities, open a demat account now with Moneysukh and enjoy world-class trading at the lowest brokerages. For intraday trading, along with daily tips and stock recommendations, you will also get the maximum margins. So what are you waiting for, share your contact details with us and start trading now.