Top 12 Golden Rules for Intraday Trading

12 Golden Rules for Intraday Trading: Most of the people come to the stock market and their main attraction is intraday trading which attracts them towards this market but as time passes we all come to know that intraday trading is a little bit tough to other trading styles like swing trading and positional trading.

Because intraday trading is very stressful, there is high risk and there is a lot of emotion involved in intraday trading, due to which the failure rate in day trading is high.

In this article, 12 golden rules will be explained for intraday trading which every beginner and experienced trader should follow if you want to become a successful trader.

Table of Contents

12 Golden Rules for Intraday Trading:

Here are some such rules through which you can learn about intraday trading to a great extent and by using these rules, you can become a successful intraday trader:

Rule 1: Always Follow a Trading Plan

All successful traders always follow some trading plan, that means they follow a trading strategy or a technical setup.

It should be clear in the trading setup of each trader that where to enter the market, where to set stop-loss, what should be the risk-reward-ratio in the trade, where to exit and most importantly, every trader should be clear about what his trading plan is.

That’s why if you want to become a successful trader then it’s very important for you to make a trading plan and trade in the stock market according to your trading plan.

Rule 2: Always Use Technical Analysis

When it comes to intraday trading, technical analysis is very important. Without technical analysis, we can’t even think of trading. Before executing or entering any trade, use technical analysis like candlesticks, chart patterns and technical Indicators.

By using technical analysis and indicators, you can easily find out, where to buy, where to sell, where to book profit and where to exit your position. Technical analysis is very important to become a successful intraday trader, so keep learning it and keep doing it in the live market. [12 Golden Rules for Intraday Trading]

Rule 3: Choose the Right Intraday Trading Time

Timing is most important in intraday trading. If you choose the wrong timing, you can also go into loss due to this, hence choosing the right time becomes very important.

9:15 am to 10:30 am, this timing is best for intraday trading because big moves are seen in this time and you can achieve your target quickly. But there is a problem in this, fake breakouts are seen more in this time that’s why you have to trade carefully.

The second timing is 10:30 am to 1:00 pm generally, at this time the markets become range-bound. There are more chances of hitting the stop loss, that’s why you can avoid this time for intraday trading.

The third timing is 1:00 pm to 3:30 pm, this timing is also very good for an intraday trader because breakouts are more reliable at this time, so you can use this time for intraday trading.

Rule 4: Pick Quality Stocks for Intraday Trading

Another very important rule in intraday trading is that you have always to pick quality stocks. You have to permanently add the best 5 to 10 stocks of Nifty 50 to your watchlists and you have to trade only in these 5 to 10 stocks.

You have to pick such stocks which give an average movement of 1-2% and which have high volatility. The volume in all these stocks should also be high and there should also be involvement of big players. [12 Golden Rules for Intraday Trading]

Rule 5: Always Follow the Market Trend

You always have to follow the market trend because your best friend is the market trend and the most important thing is that when you learn to follow the market trend, then intraday trading will be very easy for you.

All the successful traders always follow the market trend and consider the trend as their best friend, so it’s very important for you to follow the market trends if you want to become a profitable and successful intraday trader.

Rule 6: Set Your Daily Limit Loss

You should always keep this rule in your trading setup that we should not make more losses in a day or per trade. Those who are beginners, they initially think about what’s the minimum profit they should make in a day. But those who are professional or experienced traders their target loss is determined by their side, which means they decide what their daily limit loss should be.

For example, if someone’s daily limit is Rs 5000, it means he’s ready to take a risk of Rs 5000. If the loss is more than this, he will stop trading for the day. Profit is not in our hands, but controlling the risk is in our hands.

That’s why setting daily limit loss is very important, with this you can stay in the trading field for a longer time otherwise you will lose all the capital in a few days because as a beginner we have to survive in this market. [12 Golden Rules for Intraday Trading]

Rule 7: Avoid Overtrading

You have to set a rule that means you have to take 2 or 3 trades in a day, don’t take more trades than this. Beginners take multiple trades in a day in the starting phase, they take 10 to 20 trades and they think that the more trades they take, the more profit they will make.

But it’s not at all the case that the fewer trades you make in a day, the better it will be for you. You have to take as few trades as possible and that too quality trades according to your trading strategy.

Trading is not such that you have to sit in the market the whole day. You have to take only 2 or 3 trades in a day according to your strategy, whether there is profit or loss in it, accept it and close the market.

Rule 8: Keep Your Emotions in Control

When we do intraday trading we should trade like a robot, it means we have to kill our emotions, and we have to trade without emotions, emotions like revenge trading, taking trades to recover losses.

When we suffer a loss in the market, we just think that we should somehow get back the lost money and in such situations, we are unable to control our emotions and on the contrary, we start taking the trade without any setup and strategy.

That’s why you have to keep your emotions aside when you’re taking trades. Once you have decided that whatever my stop-loss or target is, just follow it and if there is profit, then book the profit or if there is loss, then accept the loss. Don’t get carried away by emotions that if the price goes up a bit, I will cut my position this may cause you even more losses. [12 Golden Rules for Intraday Trading]

Rule 9: Risk Management

In intraday trading or any other trading, we must know how to manage risk everywhere and every successful trader knows or understands the importance of risk management in trading. Learning intraday trading through risk management is a smart approach, learn about concepts like risk-reward-ratio, position sizing and setting stop-loss orders.

Always follow the stop-loss orders and take only risk a small percentage based on your trading capital for each trade, typically 1-2 %. If you prioritize risk management even when your emotions are high, then you can become successful in intraday trading.

Rule 10: Maintain a Trading Journal

You have to maintain a record-keeping book in which you have to note down everything, how many trades you took, how many profitable trades and how many loss-making trades, how much profit or loss there was or on what basis you took your trades, in what pattern you took your trades, all this you have to maintain a in a book.

At the end of the month, you have to look at this journal book to see where you are wrong. Try to learn from those mistakes and keep improving your trading skills. [12 Golden Rules for Intraday Trading]

Rule 11: Learn from Your Mistakes

When the market opens, two types of traders go to trade, one goes with money and the other with experience and when the market is closed, the one who went to trade with money comes back after gaining experience and the one who has gone with experience and comes back with big profit.

If you have come to this market with money, then in return you will get experience. There are only a few chances to make money from money, so keep this thing in your mind.

Learn from your own mistakes, otherwise start learning from other’s mistakes. If you start learning from the mistakes of others, then you can become successful in intraday trading within a short period of time.

Keeping a trading journal and record details of every trade you make including entering in the trade, the strategy you use, entry-exit options and the outcome. Keeping a journal and reviewing your trades which will help you to learn from your own mistakes. [12 Golden Rules for Intraday Trading]

Rule 12: Stay Away from Social Media While Trading

From market opening to closing i.e. from 9:15 am to 3:30 pm, if you follow any kind of social media like trading related news or channels, you have to stay away from them because social media can distract you.

For example, you make a good long position in any index or stock based on your strategy analysis and you are in profit, the market is going up. Then what happens is that you open the social media platform and someone posts that I am seeing this index and stock bearish, I will short it now.

When you see this post and then you get confused as to what to do now and you close your position because of your fear and you think that he’s an expert and whatever he said may be right.

And at the end of the day, you see that nothing like this happened, you are in the right direction but due to social media noise, you take wrong decisions. That’s why it’s better for you to stay away from social media.

Conclusion

You can make good profits in intraday trading if you do it with discipline, patience and a solid strategy. Many people don’t know how to do intraday trading, if they follow all the rules then they can learn intraday trading to a great extent and make their trading journey easier.

What are the rules and what rules should be followed to become a successful intraday trader? In this article, all the best rules have been mentioned which if you follow strictly, then no one can stop you from becoming successful.

I hope you have liked the information we have shared in this article, to know more about intraday trading you can read our other articles too. [12 Golden Rules for Intraday Trading]

Frequently Asked Questions —

What are the 7 golden rules of trading?

Top 7 golden rules of trading are as follows:

Having a trading plan
Choose the right trading time
Choose the right stocks
Always use technical analysis
Follow the market trend
Manage your risk effectively
Maintain a trading journal

What is the 5 3 1 rule in trading?

The 5 3 1 rule is a risk management strategy used in trading. It states that for any given trade, a trader should not risk more than 5% of their account on that trade and should aim for a reward of at least 3 times the amount they risked. Additionally, that trader should have a success rate of at least 50% to ensure long-term profitability. This rule helps traders to manage their risk and protect their amount from significant losses.

What is No. 1 rule of trading?

The number one rule of trading is ‘always follow a trading plan’ that means create your own setup or follow a trading plan. When you follow your trading plan or create a setup then you should know that where to enter the market, where to set stop-loss and where to exit.