Are you an intraday trading participant? Here are strategies for you
Getting a 6 figure income is not really hard with intraday trading. However, it is not a Get Rich Quick scheme as most of us perceive it to be. It requires a lot of hardwork, skill, and patience.
It takes time to finally arrive at a weekly 6 figure income, but it is very fast and easy to lose all your trading capital. This is the reason you have to know the market participants and strategies for intraday trading.
The Market Participants affect the volatility of the market in a very strong way. Therefore, it is important you worry about it.
It is high time we all understood that the knowledge of technical analysis, which involves the reading and interpretation of candlesticks, isn’t enough for trading. Fundamental analysis, which of course involves the market participants is actually a whole lot.
Okay, let us have an example. How are candlesticks formed? The market changes form the candlesticks. And also, the market participants affect the market at that particular time of trading. So those terms are interwoven.
In addition, it is very important to develop Your own trading strategies. You must have a plan! Your trading strategy helps you manage risk properly. If you adopt a very good trading strategy, your losses won’t even be up to 5% of your profit (excluding your trading capital).
Classes of Market Participants
In the stock market, participants are majorly classified into four (4) groups. This grouping system helps in the determination of price movements.
The market participants cause fluctuations in price and therefore market volatility. They are;
- Business Firms
List of Market Participants
Now let us forget about the grouping and get to see a detailed list of those who participate in intraday trading. They include;
- Individual retail investors
- Insurance companies /bodies
- Publicly traded Corporations
- Pension funds
- Institutional investors
- Index funds
- Mutual funds
- Hedge funds
- Investor groups/companies
- Other financial institutions
Causes of Market Movements?
There is always a movement in market whenever there is a change in price. This shows that price is not constant except on rare occasions. So let’s see what causes changes in price.
1. Market Participants
During intraday trading, all classes of market participants now fall under two(2) categories; buyers(bulls) and sellers(bears).
An increase in the number of buyers trading a stock will cause an increase in the price of that stock. Similarly, an increase in the number of sellers will cause a fall in the price of the stock.
These changes in price bring about the bullish, ranging and bearish trends, which in turn results in market volatility.
When the amount of buyers equals that of sellers, it results into a sideways trend. Here, the price remains constant, and therefore yields no profit.
2. Release of Major Financial News.
This method of trading is also known as fundamental analysis. Whenever a major financial news is released, traders sweep into full action. This causes high market movement/volatility. It is very dangerous to trade at this time.
3. Companies Investment News.
When there is a lot of investments on a particular stock, it maintains a bullish trend. On the other hand, if the number of a stock’s investors reduces, it begins to follow a bearish trend.
For example, the Reliance Industry Stock showed a bullish trend resulting from the high increase in number of investors.
4. Crash in Market Worldwide.
Whenever there is a global marker crash, individual stocks begin to follow a bearish trend. That is the price reduces. This is due to the decrease in the number of investors.
For instance, the global COVID-19 pandemic has affected major stocks by trending them downwards.
Intraday Trading Strategies
If you want to get rich quick on Intraday Trading, then don’t bother reading this. Making a substantial amount of money from Intraday Trading requires a very good trading strategy.
A very good trading strategy will at the end of the day, fetch high profit and a very low loss. I mentioned loss because it is unavoidable.
Any trading strategy that isn’t involving loss is not worth being called a trading strategy at all.
A good plan must include future losses and how to manage them to yield better results. When you develop Your Own strategy and apply it regularly, you will see a big positive change in your trading life.
A note of warning: Please do not copy the trading strategies of other traders as different individuals have their own trading factors.
For example, if a $10,000 adopts the trading strategy of a $100 trader, the former might end up losing his hard earned ten thousand moolah. Different theories for different people…
Enough of the chit-chat and let us see how to develop your personal trading strategy. Follow these steps carefully and improve your trading.
1. Always put your Trading Capital into Consideration
Do not trade what you can not afford to lose. It is just like hoping for the best and at the same time getting fully prepared for the worst. Anything can happen.
Also, whenever you are placing your trade, always set your Take Profit and most importantly, Stop Loss.
Ensure your stop loss is set at a price which is not up to 2.0% of your trading capital. This is very important.
2. Maintain Discipline during Trade.
If your strategy is to trade every morning, flow with it always. Let all your trading be based on that time.
Also, ensure you practice demo or virtual trading before opening a live account. Master the movement of the market before going live.
You get to develop Your Own strategy while demo trading. Try your best to maintain that strategy and see if it continues go work for you.
After mastering the market on a demo account for a long time (at least 3 months), you can thereafter venture into Live Trading.
3. Have a Stable mind when trading.
Remember that all what you do while trading comes directly from your mind. So, make it a priority to have a clear mind before and during intra day trading.
Don’t hold past loss grudges. Yout past can only affect your future if you keep holding hatred grudges of it. Instead, identify the mistakes that made you lose the trade, and learn from them.
If you notice that the market is already going against you and you can’t bear any more loss, close the trade immediately and walk away.
In the same vein, don’t be greedy with your profit. Take profit as at when due.
4. Stay updated in the Financial World.
Before placing a trade, make sure you are already conversant with the financial news of the previous and present day.
This will help you plan ahead of the next trading day. Recall I said earlier that news causes market changes, so make it a point of duty to always stay updated. Be current!
Now, you are advised to develop Your Own trading strategy. Use that strategy and adopt it for Virtual trading.
Use all the price determinants to calculate your entrance and exit of the market.
Trade on a demo account for at least 3 months using a particular strategy. Thereafter, you can use your real money.
Note that losses are inevitable, but try your best to use your loss to draw a bigger profit. In fact, you have a 60% chance of incurring losses in the first few days of trading, but time and skill will pay you.
That is why I have kept emphasizing on demo trading before opening a live account.
Instead of watching Netflix movies, watch Financial news. Traders don’t miss it. It will help you a lot.
With this guide, you should be competent enough to start trading.