Stock market moguls and so-called market gurus believe that more than 90% of traders lose money in online share trading. People come with their hard earned money to make millions and go back with an empty pocket.
Are you one of them? Do you still make continue losses in online share trading?
Day trading is a risky business and so most of the trader’s exit in a very short span of time.
It is a fact that most of the day traders lose money in online share trading. So, you’ll also lose money in day trading if you’re not discipline.
Here are some of the key reason why most of the intraday traders lose money consistently.
Indiscipline Online Share Trading
Discipline is the main reason people don’t succeed in online share trading. In fact, if you’re not disciplined, then you’ll not be able to succeed in any field.
You are risking your health by not eating on time. If you are not following traffic rules and do rash driving then you might bring misfortune.
So, discipline is the key to avoid such kinds of incident. The stock market is no different and so there are also rules and strategies to follow.
Take the highest probable trade that you have the conviction and the winning rate is more. Apart from that you also need to manage your risk.
It is very critical for you as a day trader to protect your hard earned money and limit your losses. So, discipline number one for you is never ever trading without a stop loss especially in day trading.
Set your rules of entry and exit into a trade and don’t compromise it at any cost. Moreover, you need to backtest your trade setup and intraday trading strategies before live trading.
After backtesting, if your trade setup winning rate is more than 60 per cent, then you can trade it with real money. So, select your trading strategies and trade accordingly.
If you make any loss in a day, then don’t switch to other trading strategies. Just stick to your plan and trade. So, discipline is the key to success in the stock market, especially in day trading.
A trend is a Friend – Not following Trend
Imagine you are swimming against the river current. The more you push yourself hard, the more you exerted by the current. This is because of Newton’s third law that says every action has an equal and opposite reaction.
Likewise in the stock market, never trade or go against the flow of the share market. If you’re a long-term investor, then the scenario will be different.
However, as an intraday trader, you must follow the trend. It doesn’t matter for you whether the market is bullish or bearish.
Remember that, the market will not move as per your wish. Instead of that, just trade with the market. Novice traders lose money in intraday trading by not following the trend.
Always keep in mind that, a trend is your friend. Never try to outsmart the stock market and be on the side of momentum. So, print money by following a trend from online share trading.
FOMO – Fear of Missing Out
One of the main reasons traders lose money in online share trading is panic. Panic trading is just suicide as it leads to indiscipline trading activity.
People panic because they think that they will miss the opportunity. Eventually, they compromised their trading plan because of FOMO.
So, you need to control your emotion while trading. Emotion is the main culprit that leads you to take the wrong decision.
In a day, you’ll get enormous opportunity to trade. So, don’t take a panic decision. Instead of that, patiently wait for your trade setup to form completely and then enter into a trade.
Your winning rate will improve significantly if you trade like a robot. Emotionless trading is the key to success for you in intraday trading.
Revenge Trading to Quickly Recover Losses.
When you incur any loss, then never overtrade or average your positions. Normally novice traders try to recover their losses by trading randomly. If you overtrade, then it actually leads to more losses.
You need to accept the fact, that loss is a part of trading. That doesn’t mean you will trade aggressively and take revenge from the market.
When your mood is not good, then it is better for you to go out. Trade in the next day with a fresh mind and eventually you will overcome your emotions.
Try to figure out what went wrong with the trade that gave you loss. Whether you trade quickly or you did not follow your trade setup. What could be the reason for your loss? Just ask yourself and analyse your trade at the end of the day.
Avoid Risk Management in Online Share Trading
Losing money in day trading is just a part of trading. However, you can minimize that risk by following your trading strategies. Risk management is the part of your trading plan and so you cannot avoid it.
You need to put stop loss by setting your daily limits on your maximum loss. If your maximum loss is done for the day, then it is better to shut your trading terminal.
Moreover, it also stops you to overtrade and can able to control your emotions. You need to manage your risk to avoid more loss. Traders lose more money because they avoid risk management.
You may lose money in online share trading because of not doing the small things right. So, we can say that trading discipline is the key factor for intraday trading losses.
Having said that, try not to be in the 90% category of losers and instead of that try to be more discipline.
So, implement the above rules while doing online share trading.
Did I miss anything?
Which trading strategy you adopted? Whether you are a disciplined trader?
Published on: Apr 06, 2019