7 steps to build a successful trading strategy

Intraday trading is a lucrative game. Only 5% of the traders win in this market. Consequently, 95% of traders lose. This means 5% of the people earn the loss of 95% of the people. However, winning in this game is not as difficult as it seems. All you need is the right strategy. In this article, we will help you develop the right strategy for intraday in seven simple steps.  To get an idea about all the costs involved in trading, you should use a brokerage calculator.

1. Wait for the right entry

You should not rush into a trade. Many people enter into a trade before the signal has been generated. What happens after that? The market takes a retracement. If you want to be successful in intraday trading, you have to wait for the right entry.

1. Wait for the right exit

Many new traders make a small profit and big losses. This is the reason behind their failure in the market. You should exit the trade only when the market gives you a signal of a trend reversal. You should not cut down your profits.

1. Follow stop loss strictly

Many traders will sit with huge losses but will not book it. They believe that maybe the market will reverse from here. Hope and god do not work in the stock market. What works in this market is analyzed. You should do your analysis and follow it strictly.

1. Money management

Another important thing to remember while day trading is that you should not go all in. You should not risk all your money in one trade. If the trade goes wrong, you will have to incur heavy losses. You should not use more than 1% of your capital in one trade.

1. Risk management

The risk-to-reward ratio is an important thing. You should not risk more than the reward. The ideal risk-to-reward ratio is 1:2. This means you get a reward of ₹2 if you are risking ₹1. A good risk-to-reward ratio can compensate for your losses.

1. Control your emotions

Only an emotionless person can be successful in day trading. You should leave your emotions in the bay when you are entering the market. You have to be a robot who just reacts to the signals generated by the market. If the market signals you buy, you buy, if it signals you sell, you sell. This thing is easier said than done.

1. Learn and then earn

You should not enter this market without proper knowledge. Learn everything about technical analysis. Build your trading plan, backtest it, and only then enter this market. Remember the market is not going anywhere, it is you who have to survive in this market. First learn to save your capital and then try to grow it.

To sum up

Intraday trading is not an easy game. However, you can master it with patience and discipline. Before entering the market you need to have a Demat and trading account. You can open one with 5paisa.