Analyse trade to avoid losing money in intraday

When we are not equipped with a proper trading plan then we are bound to lose money. A trade without a plan is like a gamble. A trading plan has a proper entry and exit strategy. Stop loss and targets are predetermined.

One should take a trade like a machine which means we should stick to original trading plan. Once we take up a trade based on technical analysis, we should be immune to the news and noise around the stock and in the markets.

Even if our target hits we should confine to our original plan and we should not buy more additional units just because the stock is rising as eventually it could be highly volatile.

We should not be depressed if we lose money and market does not move in a favour. Strict stop loss will help us overcome huge losses. Stick to a rule of entry and exit price. Neither fear nor greed should change our original plan. Most of the stock market trading is based on 95 per cent of psychology and the rest is technical and fundamental knowledge.

Be it profit or loss, at the end of the day try to analyse the trade which you have taken. What strategy has made you earn profit or loss. Post trade analysis helps in identifying mistakes and correction.

Similarly, it makes an analysis of the kind of indicators which we have used and how they have worked. Try to use a combination of two to three indicators while identifying a stock for selection and trading in it.

For example, in intraday trading when VWAP indicator is combined with stochastic indicator it helps in identifying entry and exit points.

Use indicators on which you have a good command. Instead of trying to understand each and every indicator try to specialise in a few and stick to them religiously.

Maintain a record of your trades, try to understand why you have made a profit or loss. After studying carefully try to save them so that it could be used for back testing.

Segregate each file based on the kind of indicators used for different trades. After certain period of time you would gain mastery on which strategy has earlier worked for you and so you can continue to use that particular strategy which has given you assured profits.

(The author is a homemaker who dabbles in stock market investments in free time)