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Risk Management Techniques in Intraday Trading

Intraday trading has a high level of risk in comparison with short term and long term trades. Any market development could easily affect price swings along with the inconsistency of the stock. In order to be profitable in the Intraday trading, you have to be an expert at risk management.

For any trade, you must know how to reduce risks. Even if you don’t have a hold on making profit, you can always cut down the loss by preparing an Intraday strategy. Without a proper plan, the outcome of any spontaneous decisions in stock market can be catastrophic. Therefore, you have to know various things beforehand, including which shares to trade, what to buy and when to sell. In this risky domain, only those who with productive strategies can survive.

RISK MANAGEMENT TECHNIQUES IN INTRADAY TRADING

  • You have to use technical analysis in determining which stocks to buy. A stock can increase near its support price( lower point of price range) and can drop its value near the resistance price( highest point of price range). But when a new development takes place, stocks can even rise above resistance.
  • You have to know when to get out after buying a stock. The stop loss should be fixed at a price under the support where extra loss could happen. In case of a consistent stock, the target should be set far apart while a consistent one could justify tight goals. You should set up stop loss or book profit price in line with stock price.
  • You have to be persistently observant during trading and analyze every development to make the right strategies. These strategies have to be effective and obliging.
  • It is so unwise to use up leverage while trading. Experienced traders instruct on showing only 1-2 times the amount held by a trader. Losses can be reduced through this method.
  • Trading in highly liquid, large cap stocks can ease buying and selling. Due to the high amount of trade, large cap stock can also be less unstable.
  • Know about everything you can about the stock before trading. Set up stop loss or book profit price at considerable price range.
  • Never set the price at which you bought the shares as the stop loss. Some traders will manipulate share prices to get to stop loss prices set at buying prices.
  • No need to set performance targets. It can force you to make mistakes and also increase your anxiety.

With a perfect strategy and trading skills, you can beat the risk factors in Intraday trading. Read more about Trading Tips and Tricks for Intraday Trading. Remember the past and learn from mistakes.

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