Profitable intraday traders make up only a small proportion of all traders. The average is about 1.7% in a given year. While these traders are quite active, accounting for 13% of the trading activity, nearly 80% of intraday traders quit within the first couple of years.
Data patterns show at least 70% of traders don't last more than a year, while 96% of them stop trading by the 3rd year. This is primarily because intraday trading cannot be carried out on a whim, contrary to popular belief. When carried out instinctively, without proper understanding or analysis, it could open doors to endless losses.
Experts at Trading Alphas emphasize traders must understand that intraday trading is subject to comparatively more volatile market patterns than regular investments. Since intraday trading involves same-day buying and selling for financial gains, assessing the risk potential for making profits is important before commencing the trading journey.
The short-term trading format requires a sound understanding of several factors for getting good returns as traders square off their open position before the end of the trading session that day.
Essentially, traders need to predict minor future fluctuations based on economic data, chart patterns, analysis tools, and experience. Whether you're planning to start your intraday trading journey with currency, derivatives, stocks, or commodities, here are some tips on increasing your chances of success in intraday trading.
Tip #1- Focus on Mitigating Risks
The primary motive of all traders is to make profits. But focusing on risk management is equally important. Intraday traders should aggressively track market trends and use technical charts to identify the entry and exit points of trades to minimize risks.
Trading chart patterns assist traders in buying at support levels while selling closer to resistance ones. Trading mentors recommend using a data-driven approach instead of relying on random internet tips or instincts. While beginner's luck may work a couple of times, it can result in significant losses when practiced without proper strategies.
Additionally, traders must add stop-loss with each position to keep the capital safe. It's important to impose firm limits on the invested capital during a month, week, and day. Learning the basic terminologies, concepts, and strategies is also quite helpful.
Trading markets are typically volatile and react differently to news flows and events not in the control of the traders. Therefore, intraday traders must avoid carrying over positions to stay safe from upward rallies or sudden collapses and premium decay.
Many traders, therefore, join trading community platforms like Trading Alphas to access an array of premium educational resources, recorded classes, technical tools, the latest updates, and advice from experienced mentors.
Traders sign up to get pre-market briefings, weekly market outlooks, and a bunch of informative trading strategy guides. Their memberships, available for as low as $69 per month, $720 per year, and a one-time payment option for only $1999, enable traders to get real-time signals for swing day trading.
Tip #2- Keep the Intraday Portfolio Fixed at 30% of the Entire Portfolio
On $2000 capital, the intraday trading sum should be close to $600, while the remaining $1400 can be put into the higher timeframe portfolio. While many people get carried away with making more money rather than raising funds for a new portfolio, it's important to understand that trading isn't a game where you find excitement—it's a business.
When the intraday trading frequency is higher, more emotions are at stake. Keeping the portfolio limited helps balance emotions and reduce the impact on investments. And while intraday trading helps make more money than higher timeframe trades, it's also riskier due to the short-term volatility of open losses/profits and trades that impact a trader's decisions.
The risk can be balanced by keeping the high-frequency intraday portfolio lower than the lower-frequency or higher timeframe portfolio. Most experts suggest a 70:30 ratio per quarter rather than per month to let the edge play out. However, the ratio can be adjusted according to a number of factors.
Tip #3- Follow the Right Strategies
Experts at Trading Alphas teach many strategies over time to help traders reap optimum results. For instance, the Momentum Trading Strategy encourages traders to pick the right stock with the right momentum and invest accordingly before making any significant change in the market trends. The stock can be chosen based on news reports that make the graph go downwards or upwards. The key is to take speedy investment decisions as soon as the news breaks out.
Reversal Trading Strategy is another strategy often used by advanced traders. The strategy requires making investments against market trends. It helps make good profits when the trading snaps back but requires a lot of analysis and calculations.
Experience and knowledge are needed to correctly identify the strengths of pullbacks. Daily pivot is a supporting technique many intruders use to focus on trading the high pullbacks and daily lows. The reversal trading strategy is somewhat similar to the Pull Back Trading Strategy. However, reversals are long-term, whereas pullbacks are relatively temporary.
Timing is integral to success when it comes to trading. The Breakout Trading Strategy also involves identifying the threshold points when stocks fall below or rise above the specified time.
Investors buy stocks considering long positions when the trend soars above the threshold points. They sell the stock or consider short positions when the prices fall below the threshold points. Fundamentally, the strategy teaches investors that when the stocks cross the threshold points, the trend will continue, and they will be more volatile.
Gap and Go is another trading strategy with considerable success in the intraday trading forte. Traders can often find stocks without much pre-market volume. These stocks open at a gap from the previous day.
When the gap is higher, it's known as a gap up, and when it's lower, it's known as a gap down. News acts as a catalyst for such situations. Intraday traders can bet on such stocks, as the gaps will close by the end of the day. The strategy favors those who want quick and short profits without much risk.
Expand your profitable trading capabilities by signing up on Trading Alphas. It's one of the best trading Discord servers, with a welcoming and diverse community that has already crossed over 1000 subscriptions.
The platform has added convenience when it comes to trading for beginners and seasoned professionals. They have made over $25 million in profits amid the global economic crisis with their extensive experience, access to tools, and know-how about the market.
You can contact them for more information before starting your career in swing, options, or day trading. The daily traders on discord provide real-time signals, trading chart patterns, trading strategies, and a lot more!
About The Author
Griffins Smith is a fresh post-graduate with interest in the financial markets. He's an active crypto, forex, stock, and options trading expert. His passion helped him become profitable as a trader. Today, he travels worldwide, offering workshops and seminars to interested traders.
