InvestorQ : How do I decide how much to invest in intraday trading?
Crowny Pinto made post

How do I decide how much to invest in intraday trading?

Answer
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Rashi Mehra answered.
2 years ago


Many intra-day traders utilize automated systems and pre-determined rules in order to figure out when to enter trades. That is absolutely justified. They usually analyze specific price-volatility patterns as well as the previous day’s price action in most cases. But how do you decide how much to commit to intraday trading in terms of your financial investments? You must actually two points; how many stocks you want to trade and how much can you afford to lose. Both are equally important.
Invest only what you can actually afford to lose in intraday trading. That does not mean that money put into intraday trading is going to vanish. The risk management is entirely in your hands. The point is that intra-day trading is high-risk trading, and an entire investment and therefore traders need to be prepared to take on that risk. It is not something as predictable as long-term investing or like putting your money in an equity fund SIP and forgetting about it. Secondly, it depends on how many shares you want to hold. Make it a point to choose highly-liquid shares only for intraday trading. Liquidity is the key, as intra-day traders must sell off their positions at the end of the day. Or they must buy it back in case they have sold short in the morning!