InvestorQ : Is true that intraday trading is more risky than delivery trading? Tell me some precautions to take in intraday trading?
vaishnavi mhatre made post

Is true that intraday trading is more risky than delivery trading? Tell me some precautions to take in intraday trading?

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Rutuja Nigam answered.
3 years ago
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Intraday trading, by definition, is riskier as you need to compulsorily close out the trade on the same day and it is a leveraged trade. If you don’t close then you may not have the money to take delivery. However, the following steps can help intraday traders:
Make it a point to trade intraday only with a trading rulebook. A trading rulebook is your trading guide which lays out how you will take positions, when you will close positions, how you will manage the risk of your overall capital, how much loss you will take in a trade, how you will set your risk-return trade-off etc. It is like the constitution that drives and guides you in trading intraday.
Avoid entering into an intraday trade without defining stop loss and profit target in advance. Intraday trading is all about having a positive risk-return trade-off. Risking Re1 to earn Re1 is a bad trade-off. Your trade-off should ideally be 2.5 times to 3 times your risk of loss. That means; for every Rs.10 that you risk you must be able to earn Rs.25 to Rs.30.
If you think that charting is rocket science, then think again. To be a successful intraday trader, you need to be your own chartist. Also, maintain a trading diary on a daily basis. This trading diary maintains a log of your daily intraday trades and the justification. More importantly, the trading diary is reviewed everyday evening and reasons for losses and profits are analyzed. That builds the habit of right intraday trading.
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