Biggest mistakes Traders Make in Intraday Trading – My Own Experience
I have been in trading for more than 11 years. I started trading in Feb 2014. You can also say that Prime Minister Narendra Modi and I started together. 🤣
I will not mention here what mistakes Modi Ji has made 🤐, but what mistakes I have made during intraday trading in the stock market and what I have learnt in these 11 years, I am going to share all those experiences with you today.
The biggest mistake of not taking intraday trading seriously
As I was new to trading and especially intraday trading, for the first 4 to 5 years I treated it like a speculative market. However, unlike many people, I do not believe that the stock market is a speculative market.
I used to buy any stock I wanted without doing any analysis or research, I used to buy it at any price and sell it at any price. At that time, all brokers used to provide an extra limit of around 50% for intraday trading.
At that time my trading account was in Kotak Securities.
Like if you have 10,000 rupees in your account, then you can buy and sell shares worth up to 5 lakhs. And this was the reason for my greed. How?
Brother, the higher the amount, the more shares will come, and the more profit will be made. It was greed that made me think only about profit. I used to think that there will be profit in every trade.
I never thought about the other side of the coin that there can be loss as well. Without doing any research, I used to read the latest morning news on Moneycontrol.com and thought that there will be action in these stocks.
If there is positive news, the stock will go up and if there is negative news, the stock will go down. This was the only basis for my entry and exit in any stock, no technical analysis, no background research.
But this intraday trading strategy never worked, 9 out of 10 trades ended in loss for me. Slowly I came to know that it is not only news that impacts the stock, but there are also other factors too which become the reason for the ups and downs of the stock on that day.
Relying on Fake tips provider instead of learning trading yourself
The second biggest mistake I made in intraday trading was that I started trusting the companies providing fake intraday trading tips.
I was cheated from both sides; the money I paid for the service was wasted and the loss incurred from their intraday trading tips was another.
Sometimes I gave Rs 5000 to a trading tip providing company and sometimes Rs 10000 but did not earn even Rs 1 profit.
I would say to you traders that learn trading on your own, don’t fall in the trap of these trading tips because they make you profit 1-2 times and after that there is only loss. Learn trading on your own, make mistakes and learn from them. At least you will save your service fee money.
Changing trading strategies daily
When I got rid of those who gave fake intraday trading tips, I started doing analysis myself. I bought an 11-inch laptop and started doing chart analysis on Investing.com.
Investing.com is a completely free website. If you do not know, then let me tell you that on this website, charts of all the stocks traded in the world are available. You can easily practice chart reading.
I also used to practice on the charts sometimes by applying MOVING AVERAGES, sometimes by using SUPER TREND and sometimes by using RSI. Every day my trading strategy was new.
This was the third biggest mistake of my trading journey. One should follow only one trading strategy and make your trading plan on the same trading strategy. If your trading strategy keeps changing, then you will not be able to do proper analysis.
There is no need to change trading strategy everyday like a girlfriend 🤣.
Intraday trading for revenge
This habit is present in many people. Once a loss is incurred, traders think that they have to recover this loss by any means.
I also used to do the same, this was my fourth biggest mistake in intraday trading. Once a loss is incurred, then another trade is taken, now suppose there is profit in that, now the trader will think that first loss was incurred, now I will take another trade, make profit in that and end today’s session, but often things do not happen as we think. After incurring a loss once, if there is a loss again then……..
That is why one should never work in trading with a feeling of revenge. Once a loss is incurred, it does not matter, stop for a while and think where the mistake happened, like there can be a mistake in stock selection, there can be a mistake in technical analysis, there can be a mistake in the timing of buying or selling, there can be a mistake in monitoring the trade. First identify your mistake and then think of taking the trade again.
If you try to take revenge from the market, it can backfire on you. No one has been able to win against the stock market till date, it always moves four steps ahead of you. 😎
In trading, loss is big, and profit is small
Brother, this bad habit is not only mine but almost 100% traders have it. Whenever a trade goes wrong, we do not book that loss but wait for it to turn into profit somehow. This is a common mistake in all intraday traders.
Anyway, this was my fifth biggest mistake in intraday trading. Whenever you come to know that your trade has gone wrong and there is less chance of making profit in it, then get out of that trade without wasting time. Instead of making a big loss, bear a small loss, otherwise your entire capital may get wiped out in the process of waiting.
There is a saying in Hindi “सर सलामत तो पगड़ी हजार“
If your capital remains, then you will be able to trade further. If your capital is not saved, then what rattle will you play in the market? 🤣
Not understanding the importance of stop loss orders
Brother, until a person empties his pocket by making losses, he does not understand the importance of stop loss.
This was the sixth and the biggest mistake of my trading journey. Let us first know what is stop loss and why is stop loss important in trading?
what is stop loss and why is stop loss important in trading?
Suppose you took a trade in Tata Steel, you bought it at 1000 rupees and kept a target that I will book profit at 1010 or 1015, but your trade backfired, and the stock started going down instead of going up.
The stock fell to 990, you had bought it at 1000 but now you are losing 10 points in Tata Steel, if you had placed a stop loss order at 995, your trade would have been automatically cut at 995 and you would have saved 5 points. That means you would have lost only 5 points.
But most traders do not use stop loss and keep carrying forward the loss position. You took the trade considering it as intraday but you do not know when it becomes an investment.
I hope now you have understood the meaning of stop loss order. Trading without stop loss is like keeping a knife on your neck, you do not know when the neck will be cut.
Stop loss works as insurance for your capital. Your capital remains safe. Never trade without stop loss in future. ❌
Trading in too many stocks
There are 150+ stocks in futures and options, it is not wise to think about all these stocks. When I learned a little about technical analysis, I started looking for trading opportunities in every stock. This was my seventh biggest mistake in intraday trading.
You do not need to analyze every stock, you make a watchlist, add maximum 10 stocks in it and trade in those only.
Bruce Lee’s famous quote is, “I am not afraid of the person who practices 1000 new moves every day, I am afraid of the person who practices the same move 1000 times every day.”
You choose a few stocks and master them. I claim that the winning accuracy in your trading will increase.
I also don’t watch all the stocks now, I only trade in large cap stocks like Reliance, Infosys, HDFC Bank, ICICI Bank, Axis Bank and such high liquid, high volatility stocks.
Frequently Asked Questions
Intraday trading refers to the process of buying and selling a stock on the same day. Positional trading is for 1 week to 1-month, scalping trading is for 1 minute to 5 minutes. In swing trading, entry and exit are made when the stock changes its trend.
There is a lot of fluctuation in the stock market every day. Investors invest money in the stock market for a long period but intraday traders are affected by these fluctuations. To avoid this volatility and protect your capital, stop loss orders should be used.
Traders should mostly do intraday trading in large cap stocks like Reliance, HDFC Bank, Tata Steel, ICICI Bank etc. Because these types of stocks have good volume and participation of big funds is also high, so there is no problem in entry and exit.
Of course, if you want to make trading a full-time business, you must know technical analysis. Without technical analysis, you will not be able to know when to buy or sell a stock. Just like food is necessary for the body, technical analysis is also necessary for trading.
Yes, fear and greed are two such emotions which are the biggest enemies of traders. Emotions always affect trading, hence today is the era of algo trading. Because computers do not have emotions and they enter and exit trading positions without any fear or greed
This is a question directly related to mindset. If your mindset is positive, then once you incur a loss, you will not trade that day, but if a trader has a feeling of revenge, meaning I have to recover the loss, then this habit takes the form of overtrading, which is wrong.