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Well to start with frankly I do not like intraday trading. The reasons are plenty. Here are a few:
1. You cannot keep your legs on two boats and sail through. You are likely to fall down. What I mean is if you have a job and you trade intraday too then it gets hard to manage both job and intraday trading. If you get caught then you may lose your job. Well it has happened to me.
2. Too much brokerage. Even if you make some day profits and some day loss – the brokerage will take away 20% of your profits and increase the loss by 30%. Effectively even if you are a good intraday trader you will be left with very less money.
3. Intraday trading cannot be compounded. I read in moneycontrol a long time back that one trader traded with Rs.50,000/- intraday equity cash scalping, even today he is trading with the same amount. When asked why he is not increasing the trading amount – the answer given was obvious – FEAR. Think yourself – can you trade with 10 lakh rupees intraday? If no, then its clear intraday is not a long solution to trading.
4. Non directional trading is not possible in intraday trading. Positional trading can be directional or non-directional depending on traders skills and knowledge. But even if you want to become a non-directional day trader, it almost impossible to become a intraday non-directional day trader. So basically you have to see all the charts and choose among hundreds of stocks to figure out which stock to trade intraday and then take a call. All this while siting in your office where anytime your boss can come in your cabin and catch you trading stock markets and not doing your job.
This is the reason I always advocate trading positional with hedge trading which you can trade anytime you want and leave for the day.
However if you are doing intraday trading it is very important to keep a stop loss. But most traders do not know where to keep a stop loss.
In this article I will discuss some ideas on where to keep a stop loss. Note that if you are a trader you must give more important to stop loss than to profits. If you can limit your loss chances are high that over time you will make profits.
Here are some tips to help you decide the stop loss place:
1. For low-volatile stocks keep stop loss near and for high-volatile stocks keep stop loss at a distance.
2. If you have decided to keep stop loss at 5 points then the profit should be at 10 points i.e. doable points of stop loss.
3. If using a trading software for support or resistance – it is better to keep stops lower than support level given by the trading software or above the resistance if you have shorted the stock.
4. Do not take stops too wide or too tight. Count in terms of money what you may lose. Don’t keep a stop where you are afraid of being hit but do not keep very close either. Take a balanced view.
5. Whatever the condition never trade without a stop loss.
Bottomline to remember:
Remember this – wider stop loss will be hit less often but will take out a lot of money if it gets hit. Tighter stop loss will be hit more often but they will keep the loss smaller.
If you are a trader with a lot of money you may choose to keep wider stops, and if you are trading with less money you cannot afford to lose then trade with tighter stop loss.
A tighter stop loss will allow you to trade multiple times while a wider stop loss will allow you to trade only once a day.
Hope this article will help you to take better stop loss decisions.
If you have any questions please ask in the comments section below.
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What you should do now1. If you have still not subscribed for my free 5 days course you can do by filling the form above. You will learn a lot about option trading.
2. If you are a new option trader, not much experienced and are making losses you can do my paid course. I recommend Nifty Conservative Option Course for beginners because it is easy to understand and easy to trade. Even a 18 year old young trader or a housewife can learn it and start trading from next day. It will help you to earn consistent monthly income without any software or speculation or stress or big risk. You will learn proper hedging strategies that works in any market condition.
3. If you are banknifty weekly options trader you can do my Bank Nifty Weekly Options & Futures Strategy Course. You will learn future and option hedging strategies that works in volatile market condition.
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Course fees: Click here to know the course fees.
Here is complete process of my course1. Once you pay I will send you the course materials for studying to your email.
2. You read and ask me questions via phone/whatsapp/email to clear doubts.
3. Then you start paper trading and still can ask me questions.
4. After about one month you can start trading.
5. Since doubts can come anytime the support will be there for one year.
Within one month you can start trading on your own. No need to depend on anyone once you are on your own.
If you have any question you can contact me.
You can read about me here and my trading mistakes here.
Dilip Shaw, Founder
INCOME DISCLAIMER: Any references in this site of income made by the traders are given to me by them either through Email or WhatsApp as a Thank You message. However every trade depends on the trader and his level of risk taking capability, knowledge and experience. Moreover stock market investments and trading are subject to market risks. Therefore there is no guarantee that everyone will achieve the same or similar results. My aim is to make you a better & disciplined trader with the stock trading and investing education and strategies you get from this website. Please note that I DO NOT give tips or advisory services by SMS, Email, or WhatsApp or any other form of social media. I strictly adhere to laws of my country. I only offer education on finance, investments on stock markets in the best possible way as much as I can through this website. Still, you must consult an authorized advisor or do thorough research before investing in any stock or derivative before trading any strategy given in this website. I am not responsible for any investment decision you take after reading any article given in this website. Knowledge is the only way to get success in stock markets. I try my best to give stock market investing and trading knowledge through the articles posted in this website. Thanks for visiting my website.