**The Power of Intraday Trading and Its Challenges**
On 19th August 2020, an intraday trader may have witnessed significant fluctuations in the market, leading to mixed results for various trading strategies. While some individuals may have seen profits, others, like me, might have encountered losses. Today, we explore the intricacies of intraday trading and share valuable insights to help traders#39; build confidence and become more proficient in their trading strategies.
The Weekend Outlook
Saturday, 19th September, is a weekend, marking a break from the bustling stock market. As markets are typically closed on weekends, it's essential to avoid making impulsive and immature trading decisions. Trading is an intricate process that demands extensive study and continuous practice. It typically takes at least 3 to 4 years to develop a sound understanding of the markets. Merely relying on other traders' profits will not benefit you in the long run.
My Trading Preferences
I opt for swing trading over intraday trading. Swing trading involves holding shares for a longer period, usually a few days or weeks, with the goal of profiting from short-term price movements. It is a strategy that requires a more patient and strategic approach compared to intraday trading. Unlike intraday traders who make frequent trades throughout the day, swing traders look for larger price movements across various timeframes.
The 19th August 2020 Trade
On this specific day, my intraday trade in Voltas (VOLTAS SEP FUT) went against the expected movement, resulting in a loss. This unusual market session caused a sudden drop of 500 points. Although stop-loss orders are important for risk management, they did not prevent the market from falling. Unfortunately, the day saw no entry points for shorting and the market remained sideways.
Building Trust, Confidence, and Faith
Building trust in your analysis is one of the foundational steps to becoming a successful trader. Trusting your insights provides a sense of confidence, allowing you to make informed and profitable trades consistently. Over time, this trust turns into a level of faith in your abilities, which is crucial in navigating the volatile stock market.
Backtesting and Forward Testing
To test the effectiveness of your trading strategy, you can perform backtesting or forward testing. Backtesting involves analyzing past data to see how your strategy would have performed if it had been used in the past. On the other hand, forward testing involves executing trades with a demo account to see how they perform in real-time. This approach can help you identify potential flaws and areas for improvement.
Keeping a Trading Journal
Maintaining a detailed trading journal is another valuable practice. It should document every trade, including the time of entry, stop-loss, target, risk-reward ratio, and the trading strategy used. Take screenshots of each trade to have a visual reference. With a sample of at least 50 to 100 trades, you can start to analyze your performance and identify patterns.
Reviewing Your Charts and Strategies
Regularly reviewing your charts and trading strategies is essential. Identify what works and what doesn't. Make adjustments and improvements to enhance your strategy. Consistently asking yourself what can be fixed or added to make your trading strategy more robust is key to continuous improvement.
Repetition and Experience
Regularly repeating the above processes can build your experience and courage to trade live. This will help you develop the necessary confidence to trade with more precision and accuracy.
Conclusion
In summary, while intraday trading can be challenging, strategies like swing trading and in-depth analysis can help you gain the confidence needed to navigate the stock market successfully. Whether it’s through backtesting, forward testing, keeping a trading journal, or regularly reviewing your strategies, these practices can be invaluable in shaping a successful trader's journey.