How to Reduce the Losses
In day trading it is important thing is to sustain. For example if you do some losses today then you should have
capital to do trading tomorrow and generate profits so reducing or avoid losses is very important. If you loose
all your capital then you can’t do trading tomorrow.
The following are few important techniques to avoid or to reduce the losses -
a) One way to reduce or avoid losses is to wait for right opportunity for trading rather doing trading for every rise and fall in the stock price.
b) Don’t wait for huge profits in single trade, take small profits and do multiple trades.
c) Don’t Overtrade.Generally people do overtrading and end up into losses. In Day trading no one has control on market and on stock movements so if the stock direction reverses then the trade will enter into losses. So it is always advisable not to do overtrading.
d) Using stop losses.Stop losses will reduce your losses to large extent if the stock direction reverses.
Protecting your capital is very important to get success in stock market.
The following are few techniques to protect your capital -
a) It is advisable to use only 50% of your trading amount for day trading and rest of the money is kept as backup.
b) Till you become experienced you can trade only with your amount without using margin amount this will help to reduce losses and
safeguard your capital. But in fact do paper trading practices till you get success and then you can start trading with actual money.
c) Don’t panic and act on any tips.
d) Don’t buy expensive trading software without testing them or without seeing the live demonstration.
e) Trading in future derivatives and options requires extra expertise so new comers are not advised to start with these instruments.
