How to make Intraday Trading Safe

By Rohit Malik

November 20, 2020


Intraday trading looks safe when you consider that there is no overnight risk when you are trading intraday. But, the reality is quite different.

Trading is like driving a car (sometimes with an unclean windshield). Intraday trading is like driving a car on a busy single lane road. It is doable but quite stressful for the driver.

Is Intraday Trading Safe

For a beginner, it is not safe to jump directly into intraday trading. Because it requires quick judgment and discipline. But, if your trading is simply to earn a limited amount of money at the end of the day, intraday trading is safe and easy to do.

The problem is that there is conflicting advice on this query – is intraday trading safe?

Is intraday trading safe?

Yes, within itself, intraday trading is quite safe to do. But, not if you are new to the market. Let me explain this.

I have explained about intraday trading and the benefits of trading intraday in my post – Intraday Trading for Beginner’s Guide. I have also mentioned the problems with intraday trading in the same post.

The skills required for intraday trading are two-fold – quick judgment and discipline.

Let me explain these in a little more detail and tell you how to make intraday trading safe for yourself.

Quick Judgment for trade decision

The stock market is open for trading for a period of mainly 6 hours only. Thus, you have to manage all your trades, risk management, and trading strategy within these 6 hours only.

Thus, it means the time frame to look for a trading opportunity is quite small. Thus, it needs quick judgment as a skill for intraday trading. This comes with some amount of practice.

Then there is discipline.

Discipline to profit management

Let me tell you one thing – most of the intraday traders make a profit in their first trade of the day. On most of the days in a month.

But, then they loose that profit in rest of the day.

Funny, isn’t it? But this is the truth.

You see, most of the intraday trading strategies are based on the open/low of the index or the stock. This means a reasonable profit can be made within the first hour of the market open. Or even in mid of the day.

But once the profit is made, and you have closed the trade. It is very difficult not the see the price movement and try to earn more (increase the intraday profit). And that is where most trading mistakes happen.

Thus, analyze your intraday trading strategy and decide what is good enough profit based on your trading capital and strategy. Once you have decided that, you need the discipline to maintain that as a trading rule.

You work on these two skills and you can easily make intraday trading safe for yourself.

What else do you need to make intraday trading safe?

The next thing to make intraday trading safe will be to maintain a trading journal.

I have explained everything about – how important a trading journal is for trading in this post. I have also provided a free trading journal template based on Google Sheets in this post.

When you maintain a trading journal, you can analyze your trades in the evening and plan better for the next day.

Once you have done it for at least 15-20 trading days, you will see a strong improvement in your intraday trading results.

The other thing you need is – a trading community – is possible. These days, it is quite easy to be a part of a trading community where people like you – intraday traders are there and share their ideas.

Such a community can help you to improve as an intraday trader must faster than you think.

Conclusion about how to make intraday trading safe

If you wish to make trading a side hustle for some extra income – then swing trading and intraday trading are good enough options.

Each has its own risk and rewards. For example, in intraday trading, you know your final profit at end of the day. Not when you close your trade (as it is there in the swing trading).

And to make it safe in intraday trading, you need to follow the below-mentioned rules as the main rules of your trading approach –

  1. Maintain a trading journal
  2. Start small – Start with small trading capital and increase only when you have done at least 30-40 trades on the same strategy.
  3. Focus on finding the perfect points you can make in your intraday trading strategy and then develop discipline on keeping that as a risk management rule.
  4. Learn how to decide quickly. You can’t spend too much time on a trading decision. If in slight doubt – take a small position.

If you follow these rules, you can easily make consistent income from intraday trading.

About the author

Rohit Malik

A yogi who like Finance and Technology. I have been in Indian Stock market for over 12 years now as financial analyst, portfolio manager, trader. Now, I focus on Yoga, Financial Education & Long term investing. 

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