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Things to Consider While Creating a Day Trading Plan

In theory, intraday trading has to do with buying at low price and selling at a high price, all in the span of a single day. Such chances to buy and sell could be for specific stocks, sectors, or markets in totality. How successful a day trader or an intraday trader is, depends on how well stocks are identified and the best possible positions taken at the correct time. This is theory. In actual fact, the process of trading in a day is a little complex. To be successful at day trading, you may want to consider paper trading first. This lets you work on a simulated platform where you can practice trading without actual money. 

You Must Have a Plan

If you know the roadblocks you are going to face while day trading, you can effectively make a plan to avoid them. One of the largest roadblocks facing intraday traders is the tendency to get carried away by the sentiment of the market, or in other circumstances, away from it. Consequently, if the markets are abuzz about a particular sector, day traders will veer towards that sector. What you need to understand, as a day trader, is that the margin for error can be substantial and one bad call can result in huge losses. Day trading happens quickly and in stock trading, this kind of trading is dynamic, so if you are not trained at it, you may fall short of any gains. The best thing you can do is to plan ahead and stick with the strategy you have considered. As with any plan you make, a plan for day trading has some basic starting points and you must think of your own trading behaviour while thinking of a plan. 

Are You Ready to Take Risks? 

The best trading platform may be chosen for your day trading, but in every trader’s mind is the question of tolerance of risk. After you open a trading account with any good brokerage, like one with Motilal Oswal, you have to think about risk. How much risk can you take? You must make trading decisions that are largely based on objective analysis and not emotions. In day trading, investments are made and transactions conducted in a span of a few hours, unlike long-term investors who have the time to permit stock values to go up. 

Risk Management

Concerning the subject of risk, you should have a plan to manage such risk. This involves a trader knowing when they should book profits or hold stocks. In the duration of a 24-hour period, a stock may rise and you may be in a quandary of whether to sell for profit or wait for it to potentially rise further. It's a good idea to book your profits for fairly good profit, instead of hoping it may go up even further. In the event it goes even below what you bought it at, you will be at a loss. Your decisions have to be made at the spur of the moment, and if you partake in paper trading beforehand, you will get a feel of markets and shares in day trading. 

A Steady Rise

When quick decision-making is the need of the hour, you cannot afford to hesitate as a day trader. Hence, day trading is not for everyone. Make a plan to start slowly with a broker that can help you be a success at day trading with many educational videos and blogs. Such a broker is Motilal Oswal and you may start the execution of your plan when you go ahead and open a Demat account at Motilal Oswal.

Related Articles: How to Open a Demat Account Without a Broker | Factors to Keep in Mind While Opening a Demat account | Factors to Consider When Opening a Demat Account | 10 Points to Remember When Operating your Demat Account | Types Of Demat Account & Trading Account | Upcoming IPO | LIC IPO

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