Finance

Reasons Intraday Traders Lose Money

Elizabeth

Buying and selling stocks and securities on the same day before the market closes is known as Intraday trading. It is usually the preferred method of trading because it earns traders a profit on a daily basis. Intraday trading is clearly a high-risk game. Unlike what a lot of people believe, intraday trading is not just about the right ideas and the right trade. It is much more about how you deal with your risks and adhere to your trading disciplines. Common errors that a lot of intraday traders commit include: averaging your position, attempting to defeat the market, over trading to recuperate losses, concentrating a lot onintraday tips, and so forth. Statistically speaking, nearly 80-85% of intraday traders end up losing money in the stock markets. 70% of the intraday traders do not last beyond the first year and 90% do not last beyond the third year. What could be the reason behind these startling numbers and heavy losses incurred by the traders? In this article, we have tried to answer the million-dollar question. What are the reasons that lead to intraday traders losing money on a regular basis?

  • No trading plan:

The most significant explanation behind why intraday traders come up short is on the grounds that they, for the most part, don’t get ready or don’t have an appropriate trading plan set up.The correct trading methodology, risk management strategy, and money management strategies aresignificant pieces of the trading plan, which is required to make progress in day trading.

  • Lack of discipline:

As a rule, day traders are inclined to fizzle in light of their wayward methodology towards trading. They as dealers do not follow an efficient procedure and don’t utilize proper risk and money management methods set up. Most inexperienced intraday traders don’t utilize stop loss and oversee risk in a legitimate manner. The risk management leading to failure in day trading because day traders book profits early and take long losses. Trading discipline is critical because as an intraday trader, your primary focus must be to protect your capital and limit your losses.

  • Greed and Fear:

You must be incredibly restrained with intraday trading. One of the keys to accomplishment in intraday trading is having and executing a stop loss and target plan. Regardless, staying with the arrangement isn’t as easy as it sounds. Prior experiences with benefits and misfortunes can cause greed and fear. These feelings regularly cause unreasonable conduct and are the greatest hindrance to remain disciplined and execute according to plan.

  • Going by intraday tips rather than self-trade:

The flow of tips in the trading community is endless. A major test for intraday traders is the means by which to trade and what stocks to trade. While specialists do give trading thoughts to customers, regularly traders additionally depend on outside sources for tips on trading. It is best to maintain a distance from those. The most ideal approach to trade intraday is to continuously ace how to understand charts and how to decipher news flows and trade all on your own. It is a slow procedure however there is actually no option but to learn methodically and trade on your own.

  • Trading against the market:

For a long term investor, taking a view against the market might be profitable in the longer run. In any case, in the event that you are a trader,at that point, you should ensure that you always stay on the side of the market.The correct side for traders is the side of momentum. Continuously trade in favor of momentum and never attempt to outmaneuver the market. That is a formula for losses in intraday trading.

  • Poor feedback loop:

One of the key strides in intraday trading is to guarantee that the feedback loop and the learning procedure are finished. In a perfect world, the intraday trader must keep up a trading journal that records the trades, the justification for the trades and the audit of trades each night. This will fill in as an essential manual for the intraday trader’s constant learning process.

Most intraday traders lose money because they don’t get the little things right. Deal with the smaller things and the bigger things will fall into place on their own.