3 important steps for becoming an intraday trader

How to become an intraday trader: three steps for a beginner

Intraday trading is one of the most popular types of trading, where a trader opens and closes trades within one trading day. Thus, a trader controls his open positions within the intraday trading strategy and doesn’t transfer trades to the next day. Traders actively apply intraday trading in the Forex currency, futures and stock markets.

Nevertheless, the financial market participants assess efficiency of intraday trading differently. Traders that prefer investment approach state that intraday trading is gambling. Their opponents argue that intraday trading could be difficult for beginners, but quite a profitable and achievable task. In any case, the number of traders that use intraday trading strategies permanently grows.

However, before starting intraday trading, a beginner should make several basic steps, which we will describe in this article.

In this article:

  • Step 1: Self-assessment;
  • Step 2: Required instruments;
  • Step 3: Planning.

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STEP 1: SELF-ASSESSMENT

Before you start intraday trading, step aside, look at yourself and ask yourself whether you possess the required qualities. Since the modern financial market is a very dynamic environment with extremely high competition, this self-assessment might be very useful. It will help you to understand whether you are ready to overcome difficulties, which you will face on your way to success.

A rigorous self-assessment is the first and important step on the way of your professional growth and includes the following elements:

  • Personality type: a simple personality test would help you to identify your psychological profile. Since such personal qualities as risk loving or impulsive behaviour significantly influence trading results;
  • Goals: understanding trading goals and tasks before starting to trade in the market would help you to develop your own trading style;

Specific features: understanding your strengths and weaknesses is required for self-perfection. If you are not technically skilled or not on friendly terms with numbers, additional training in these fields would help you to feel more confident while trading.

It should be noted that intraday trading is not good for all traders. That is why, before you start intraday trading, make sure your personal qualities are compatible with this trading style. Perhaps, it would help you to save time and money.

STEP 2: REQUIRED INSTRUMENTS

The number of active traders has grown significantly during recent decades. It happened due to development of information technologies and Internet, which made the financial markets accessible for the majority of people. As of today, the modern markets are nearly a completely digital environment. That is why you need to take care of the following in order to trade efficiently in the modern digital trading platforms:

  • Equipment: Devices, which you use in trading, whether it is a mobile gadget, notebook or desktop, should be rather powerful in order to process the market data at a high speed;
  • Access to the market: stable and safe Internet connection is the must for remote access to exchange and broker servers;

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STEP 3: PLANNING

No intraday trading could be successful without a full-fledged trading plan. The most important part of the intraday trading lies in making trading decisions by a trader. Development of a justified decision about time, place and method of opening a trade influences success of your trading as a whole.

A full-fledged trading plan should include the following elements:

  • Opening/closing trades: fast identification of profitable trading opportunities is an important parameter of any trading strategy. Trading, based on strict following the strategy rules, would allow systemizing the trading process and ensuring optimum points of opening and closing trades;
  • Controlling the position: a full-fledged trading plan would help you to clearly identify the place of posting a stop loss and take profit in each executed trade. Advanced control of your trading position could include both pyramiding and use of a trailing stop;
  • Risk management: maximum efficient use of trading capital is an integral part of intraday trading. Understanding its possibilities in the context of acceptable risk-reward ratio will help you to avoid too optimistic expectations with respect to the trade profitability.

Using a trading strategy guarantees that all actions of a trader on opening, controlling and closing of trades bear a disciplined and step-by-step approach. It is impossible to assess efficiency of trading without strategy and all your profits and losses would have the accidental nature.

Intraday trading could be financially profitable, but a complex and ambitious task. Nevertheless, if you follow all three steps, described in this article, success in trading in financial markets will become possible even for beginners.

 



 


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