Stock Trading- (Day Trading)-11

                              xi- High Rate of Return trading habits/rules, Small Trades and Trailing.

A.- Trading Habits/Rules-

1. Studying charts:  Consistent practice will make you find new patterns, edges, and setups. New edges and better analytical skills will boost your trading arsenal.
2. Journaling trades: Reviewing past trades will help you understanding your mistakes. Tracking your emotions during entries and exits can improve your psychological edge.
3. Back testing: Back testing your system repeatedly, by correcting your mistakes, will drastically improve your execution and self-discipline level.
4. Planning trades in advance: A step-by-step plan will help you control your enemies like fear and greed.
5. Checking rules before a trade:  Paste your trading rules in front of your PC and check them before you take any trade. Trading is a long-term business.
6. Thinking in probabilities: Thinking in probability will increase your mental accuracy like nothing else in the world. Execute like a robot and manage risk and trades like a casino.
7. Increasing goals gradually: Trading is the most rewarding business in the capitalism era. Your effort and skills will compound 1000x your money, so break your limits.
8. Patience and the love for trading will determine who will stay and who will quit.
9. Trade only in best Day Trading Stock.  Best trading stock includes High liquidity, Reasonable volatility, Sector Specific Stocks, Stock with good correlation with overall market.
10. Right Entry, Exit and Stop Price. The first and foremost important trade require to set an enter price, exit price as well as escape price. Never underestimate the importance of exit strategy.
11. Market position with Limit orders Instead of Market Orders. 
12. Do not do trading Daily.  Wait for the best opportunity possible. Your patience will surely pay off.
13. Trade with money which you are ready to lose. 
14. Nobody has made money in the Stock market consistently without the knowledge & experience. The stock market respects and operation needs both. Never think that the Stock market as a part time job. Time & experience teach a lot of lessons. Traders who learn from their mistakes can earn, and others QUIT.

B. Importance of small Trades in Controlling Emotions (and loss)- It is crucial to be able to control your emotions in trading. How you trade decides to help keep you stable emotionally or make you emotionally wreck. You may be trading in a way which causes huge swings in not only your account but your emotions as well. When you are emotionally erratic, it is impossible to consistently make good trading decisions. This can spiral out of control and even cause you to blow your account.

 

So, earning like, 5k + 7k -2k+ 4k + 8k -2k =20k, is better than 50k - 80k + 30k - 20k + 40k =20k. The second option will leave you emotionally exhausted. This is why many traders fail to control their emotions. You should reduce the size of your swings - your wins may not be so big but your losses will not be so big either. Less major swings in your account, the less emotional swings you will have in your life. Trading is an emotional roller coaster but it is up to you to decide how high and low you want the swing to be.

C. Trailing is a controversial and double-edged weapon in profiting strategy- On one side it protects the earned profit from loss but on the other hand it limits potential profit. So, it is individual’s preference whether to go for trailing or not. I think when you are in profit you can go for potential maximum profit at the risk of single SL. On the other hand, if you are facing continuous drawdown and tasked with rebuilding the capital, it can be a good strategy to go for NO-LOSS philosophy and go for TRAILING.

Stock Trading- (Day Trading)-10

                                           X.-Cost, Type and Time of (day) trading

1.Cost-Before one starts trading, understanding the cost of trading is very much important as choosing the broker, minimum size for a single trade, type of trade, segment in which to play etc. depends on it. Ignoring this may turn your gross profit (sale price-purchase price) in to a net loss. Including brokerage, there are 7 different type of charges we end up paying to any broker, 1. Brokerage, (Motilal Oswal does not charge for intra- day equity trade) 2. Transaction charges. 3.GST on brokerage. 4.STT.5. Sebi Fee.7. Stamp duty.

 

Let us assume, you bought and sold 1 lot Bank Nifty futures in Intraday. You buy at 32000 Bank Nifty futures and sell at 32010. a ten points profits. Considering, you are trading with 1 lot, which is 20 quantity, then your gross profit is 20*10=200 Rs.

 

Item	Rs.	But in 200 Rs. profit, there are multiple cost you end up paying, Rs.40 is gone for brokerage assuming Rs.20 per order, so buy side Rs.20 and sell side Rs.20. You pay 18% GST on brokerage, which is 18% on Rs.40.Then you pay 0.0019% of turnover as exchange transaction charges. To calculate turnover, simply multiple quantity with entry price/exit price, that (20*32000) +(20*32010). You pay Securities Transaction Tax, which is 0.01% on sell side turnover, which is 0.01% * (20*32010). You pay SEBI Fee, which is 0.0002% on total turnover, which is 0.0002% * (20*32000) +(20*32010). You pay Stamp duty, which is 0.003% on total turnover, which is 0.003% * (20*32000) +(20*32010).
Entry	32000
Exit	32010
Profit	10
Quantity	20
Gross Profit	200
Brokerage	40
GST on Brokerage	7.2
Turnover	(1280200)
Transaction Charges (0.0019%)	24.3
STT 0.01 % on sell side Turnover.	64.00
SEBI Fee 0.0002% on Turnover	2.6
Stamp Duty 0.003 on Turnover	38.4
Total Charges	176.5
Net Profit.	23.5

Adding up all charges, it is around Rs.176.5, so in Rs.200 profit you ended up paying Rs.176 as total transaction cost, so simply we should not carried away by gross profit or take away only Rs.40 brokerage we pay as our charges.

These charges changes from broker to broker and time to time and greatly affect the size and type of trade. Recently, govt. increased STT on Futures and Options (F&O) trading, effective April 1, 2026, contain the increasing volume and losses to retail traders.

 

2.Types of Trading (within a day) -Day trading involves A. trading during the day, whereas B. high-frequency trading is typically done round the clock. Day traders are usually able to make slower, more thoughtful decisions, whereas high-frequency traders are generally looking for "quick in-and-out" trades. (research shows day trading is more competitive in markets with low volatility, whereas it is less competitive during periods of high volatility). Further C. a scalper is who aims to capture small moves with significant quantities and plans to take more trades and uses, 1 min, 3 min, and 5 min timeframe charts.

 

However, both high-frequency trading and day trading draw from the same sources of information (i.e. price chart) that could lead them to the same conclusions or predictions about an asset's future movements. But the chances are very less (of agreeing)

 

Day trading is often touted as being lag-free (without delay or interruption).  Day traders do not have to compete with high-frequency traders because their trades are slower and less frequent. Opportunities exist in all the timeframes, be it 1 min, 5-mins, 15 mins, 30 mins. Hence day traders should pick one trading system that has a positive edge and should take a small risk with each trade. Just ensure to use ‘LIMIT’ or ‘SL-L’ order to avoid any accidental slippages (Loss).

 

3. Ideal Entry time and time frame for day trading- Market tries to settle in an hour, within that period, first 30 minutes are very important, If the price does not go below the first 30 minutes low, then it has meaning. It is considered important because in that period it tries to make day’s high and low and try to find its feet. Sometimes first 15 minutes form as master candle, price rotates in that range till the end of that day, one should master the intraday patterns, thoroughly then one can succeed.

 

Time Frame- One should use time frames around 15 mins to 1hr because it provides the most consistent chart without waiting for a longer time. This provides more time to do more trades within a day. Always remember, the quality of your trades is more important than the quantity.

 

a. Never enter the market at market start. -i.e… at 9.15am. Calculate the formula for both short and long around 9.45 am. Trades should come only after 10.45 am till chart templates bottom cross for buying on bullish days OR indicators top cross for shorts on Bearish days.

 

b. Enter the market at (for analysis) 9.50 am. By that time all amateurs, inexperienced, BTST & STBT people would have left the market.

 

c. Never trade between 10 am to 10.30 am. Many times, all these technical trading signals will be FAKE. So keep yourself busy in doing xl calculations to find out the probable list of stocks to be taken up for that day trading till 10.30am. NEVER DO THE AUTOMATION OF YUR CALCULATIONS.  Do it manually during this time. This will safeguard you from indulging in to wrong trades between 10 to 10.30am.

 

Considering all above ultimately trade only in those stocks which your buy /sell charts templates qualify. Wait patiently till your BUY / SHORT chart templates indicates the trades initiation. Hold on to the trades till your technical charts indicates to book the profit.

Stock Trading- (Day Trading)-9

                                            ix-Trading is a Business- (Trade Plan)

As said earlier Day Trading is one of the greatest profession in the world but still more than 95% people fail in that because of indiscipline. In day trading only rule book works wherein you need to write your own strategy and follow that relentlessly irrespective of situation. A day trader will have to work in every type of market -euphoric, bearishness, volatile and dull markets. Every market needs to be traded accordingly.

 

You can only master trading or become master in trading in all types of market when you start treating it as a business. Maximum problems vanish once trading is treated as a business. But for most of the people, treating trading as a business does not click. Because if you go through your trades and cross check them, you will begin to realize that for most of the trades you do not stick to your plan.

 

Like any business, traders should have a plan. When to enter, when to exit and how to manage the trade. Make a trading journal to understand the trades you have made. Never trade like a gambler and never lose more money than a predetermined amount in any single day /single trade and once that amount is lost stop the trading immediately because that money can be made in next few trading sessions but if you have taken a big loss which would not only reduce your chances to make profit in next deals but demoralise you. You scale up (only) by executing trades that are logical and follow your system.

 

The successful trader has a trading plan where he adjusts his traded amount per trade, since he knows anything can happen. A mastery of stop losses. Trailing to remain above loss. A mastery of take profit areas. When this trader does not see an opportunity, he immediately closes the trading app.  It is important to thoroughly back test a strategy so you can establish trust and poise and have an adjustable trading plan such that the losses do not decimate your capital before your time to shine comes. It is 80% mental disposition.

 

To succeed, you must master one setup on one market before you move on. If you do not know what to master first, take up to a month to decide trying out all of them on demo and then decide. This market does not reward the jack of all trades master of none.

 

It is very easy to think you understand above thing, but once you begin to ask yourself the questions, you dig into the real answer and that is where the true growth lies. The mind once expanded by a new idea, never returns to its original dimensions. Once you stop doing gamble trading and start doing trading which follows a system that works, there is no looking back.

 

Remember making money in the markets is not really that hard. Making more money than everyone else, that is hard.

 

Successful intraday traders are set apart from unsuccessful ones by several key factors: Less Expectations: They maintain less expectations from the market (within 5% returns per month). Open Mind: They are open to learning new things and quickly adapt to any changed situations. Emotion Control: They can detach themselves from emotional impulses and make rational decisions based on their trading plans. Money Management: They deploy disciplined risk management strategies, such as setting stop-loss orders, hedging their position, and limiting the size of their trades. They understand the importance of preserving capital and avoiding significant losses is the key. Personality: They often develop a strategy that suits their individual style and personality.

 

Overall, the combination of market knowledge, risk management, emotional control, continuous learning, and a defined trading strategy are critical factors that make successful day traders/businessman in trade.

Stock Trading -(Day Trading)-8

                             Viii-Losing Streaks Probability and Money Management:

What is the probability of a losing streak? If your strategy has a win rate of 60% there is chance you will experience a streak of 12 losses in a row.

Win %	Probable streak
40 %	21
45 %	18
50 %	16
60 %	12
70 %	9
80 %	7
90 %	5

Let us say a trading system has 60% accuracy. It means out of 100 trades, 60 are winning trades, and 40 are losing trades.

Automatically, we assume the result will come in this pattern: WLWLWLWLWL. Where, W - Winning Trade and L -Losing Trade. But statistically, there is a possibility of 9 losing trades in one stretch when the accuracy is 60%. It means it looks like this: WLWLLLLLLLLLW. Let us say you have a habit of betting 10% of your capital per trade. In this case, your entire capital will be wiped out (except that 10%), and your situation will be pathetic. But if you risk only 2% of your capital per trade, then you lose only 18% of the capital and still you will be in a better frame of mind to manage trading.

Money management is most important in trading as it ensures capital preservation and long-term success. Setting risk limits per trade helps protect against substantial losses, allowing traders to stay in the game during inevitable downturns. 

Stock Trading-(Day Trading)-7

                                             vii. You can NOT be afraid to lose money. –

If you are not mentally and emotionally prepared to lose money, you will never make money and this is why 95% are not successful. Because of their weak psychology, (most traders take losses to the heart and get frustrated why their trading strategy is not working) they(trader) forget to understand that a loss is only a learning lesson for trading. Remember one thing- every day either you would earn or learn and you should be fine both ways. Each loss will only help mould the successful trader you will become in future. It is hard now, but in years, you will be grateful for it.

 

Profitability is based on series of Transactions- Remember, if you trade, you are going to lose (some trade). Losing is not that catastrophic. There are strategies that give you a winning percentage of as high as 90%. That means 10% loss. We make money on a series of transactions (as explained below), not from a single transaction. But most associate losing with failure. They equate success to winning more trades than losing trades. They ignore what matters most; the size of your wins, not the frequency of your wins. A trader can win 1/3 of their trades and make millions, if they know what they are doing. They need to follow and understand a simple formula. (avg win Rs) x (win %) must be greater than (avg loss Rs) x (lose %). Your goal is to increase your win amount, not win % and reduce your loss amount, not your lose frequency.

 

The amount of loss is way more important to your long-term success, then how often you lose. If you make 10 trades and lose Rs.1 on 8 of those trades, you only need to make Rs.4 on the other 2 trades to breakeven. You could lose 80% of time without losing any money (ignoring fees obviously). If you have a plan that keeps you loses small, and lets profits run, and you trade enough, you WILL make money. How to ride your profits with your day trades is the most challenging task in day trading.

 

Statistically you should win about 50% of your trades, but most traders are just slightly less because they exit loser early, which often may have been winners, so the % is skewed to the downside.  You should risk Rs.1 to make Rs.2 on every trade, at a minimum That means you never close a winner until it is at least twice your stop loss. This ONLY works if you honour your stops. If you put on a trade and it at a Rs.1 loss, get the fuck out. We do not care if it might come back. If you have a winner and it is a Rs.1 gain, let it run. You will feel pressure to take it off, but do not do it. Your emotions will kick in, especially when you see price start to fall back, so you must fight back the urge to take it off. We are looking for Rs.2 or more. When it hits Rs. 2, maybe scale out and take off 2/3 and keep a 1/3 runner, but keep the stop very tight or you can take the whole thing off. That is up to you.

 

The key is to let that profit run. It will not be easy. It will be very hard to do. But it is the only way you will be part of the 5%. There is a saying luck favours brave and prepared mind so better be prepared and brave enough to cut losing position and book your losses and allow profit to run. 

Luck is in your favour which brought you to this profession and God is kind on you that you can day trade.

Stock Trading (Day Trading) -6

                                                        vi. Old habits

 

Old habits that work against you in Trading- There are many habits and are part of our character that may be working against the success in Trading. But I will take only 5.

 

i.Purchasing when cheap- Generally in day-to-day life services or commodities themselves do give benefits/ satisfaction to us, and so when they are available/ offered at lower rates in the market we tend to purchase or purchase more of it to increase our satisfaction. For example, vegetable or oil which themselves has utility, if available cheap, it is good idea to purchase them at low price. Then this (purchasing cheap) becomes a part of habit. 

 

Now consider SHARES / Financial product, which themselves do not have any benefit unless we are able to sale (in future) them at a price, higher than the purchase price. If they are available cheap, it means no body is interested. So, why should we purchase? But because of habit (of purchasing cheap) we do purchase (cheap) and lose. Contrary to it when they are available at higher price (prices going higher), we feel they are costly (and do not play along) and miss the opportunity of profit.

 

ii. Getting success at any cost- From the child hood, (before we get success) we face many failures. So, striving for success (despite failures) is hard wired in our brain system. But this works against us in Share Market, as we cannot accept a single SL a part of trade and take it as insult, humiliation etc and try to convert position in the script (not for money but for honour) by further (forced/revenge) trade, which result in more loss.

 

iii. Short cut Method-Man is used to make conclusion about any situation/ person /thing very easily based on only one or two attributes and is not in habit of making comprehensive analysis. Thus, we conclude about a person based on only what he/she wears etc. We conclude about economy from experience of the group we interact and so on. Our mind is wired to give quick response and not first detailed analysis and then respond. This habit causes loss in trading as we take decisions of entry-exit based on only 1-2 signals which we can grasp at that point of time, ignoring all other factors that are affecting scripts price movement.

 

iv. Not able to sit idle- गीता कहती है- कोई भी मनुष्य किसी भी क्षण कर्म (काम) करें बगैर नहीं रह सकता। This nature of human being is big hurdle in making trade a successful activity. It becomes impossible for us to sit idle in front of trade screen and do nothing or just wait till we get all signals OK (which takes generally long time), and then trade. Feeling of doing nothing bore us and we are forced to act (trade) by mind. Trading is just like ‘FISHING’ you wait -wait -wait till a fish is stuck in your tackle’s hook. Thus, trading is a game of patience, you must understand, like not taking decision is also a decision, doing nothing is also doing.

 

v.Rule Bound/not having flexibility- It is a good idea to play in stock market by certain rules and strategy. Else you will be nowhere. One of them is entry/ exit rules. But following them for the sake of it without realising reality on screen and acting on it is counterproductive. Case - A. like in bull rally not taking entry because entry point is beyond range is losing opportunity or B. when it is clear your trade has gone wrong and that SL is going to be hit but not acting by principle of “भागते भूत की लंगोटी” and exiting trade to minimise the loss or booking whatever profit available.

 

Follow affirmation techniques to get rid of above negative habits. Write down the rules for intraday trading on a cardboard (thick paper sheet) and stuck it against the wall near trading table. Read the rules a few times before the market opened and read them repeatedly whenever you get some free time during the market hours. Someone might follow all the rules without the aid of all these things. But fresher need some external help.

MY EXPERIENCE IS THAT MAKING SUCH LIST/RULE IS EASY. FOLLOWING THEM IN LIVE MARKET IS VERY-VERY DIFFICULT. UNLESS THESE DOES NOT GO INTO YOUR MUSCLE MEMORY NOTHING CAN BE ACHIVED.

Stock Trading (Day Trading )-5

                                                                  V. "I don't know."

"I don't know." Concept- In one medical session a person asked - "Doctor, many people say if we keep the painful body part under waterfalls for a few minutes, the pain will be cured immediately. What is your take on this?". Doctor said - "I don't know sir; it is not mentioned in the books which I have studied. So, I cannot say anything. Please let me know if you try this method and if it works!". He still was able to say, "I don't know."  But over 99% of the people cannot say "I don't know," and this attitude is the biggest obstacle to growth in life. Because when we agree that we do not know something, our mind opens for learning. But when we develop an opinion about everything, it indicates our mind is closed to knowledge, and we will not get the life lessons.

 

Improving self for Trade-The same logic applies to stock market trading as well. Most people arrive at some conclusions when they see some fluctuations in the chart, and they opt for the trade(entry/exit). Instead, if they develop an "I don't know" attitude, they walk on the path of successful trading. When you think you know everything in the market, the next day you lose big money. If you lose money on any trade, then you have made a mistake. There is a lesson to learn (no matter what). You are right if you are making money in the market. Profit in trading is inversely proportional to your ego.

 

Never punch an order if you do not understand what are you doing and why, also know your possible loss before entering the trade. Keep a checklist of rules you must follow for each trade, unless you tick the checklist and find all rules in place, do not trade. Ultimately it is about who can remain patient in the process of back testing/demo testing and live testing to build a profitable trading plan.

Stock Trading (Day Trading)-4

                   iv. Root cause of failure/ Essentials of Success- Amygdala hijack

Main reason that makes trading so difficult and prone to failure is mainly due to an aspect of trading which is called the amygdala hijack. It affects the part of our brain called the amygdala or the reptilian brain. It is an evolutionary knee jerk reaction that triggers pain or pleasure, fear, or hope. So, if one wins a trade, there is great euphoria, followed by fantasies of wealth, if one loses, there is great pain, regret, and frustration, usually followed by anger and revenge (trading).

 

On a cognitive level, you can say do this or do that when standing on the sidelines looking in, kind a like yelling at the players when watching a game. However, when an individual is IN the game, that objective perspective is replaced by a very deep and total animal sense of survival. That is why it is hard to see the market clearly when one has something at stake in it. You are mainly just focused on how near or far the market is from your entry point.

 

So, to be good at trading, more than anything else, a person must have a great sense of self awareness and emotional intelligence. Trading is mainly, pattern recognition, which is very straight forward. In truth 90% of trading is- being able to transcend your emotions when they arise. This can be done BUT first you must recognize what the situation is and realize what you are getting into. Then, once you know the playing field, you can mentally prep yourself before getting into it and be ready for when the emotions DO arise. This takes effort and lots of practice.

 

So, the trading is to dissociate (yourself) with the emotions that arise as you watch the rise and fall of the markets. It is the ability to realize that what your emotions say is happening, meaning fear of loss (aka death) or hope of gain (aka safety and immortality), does not actually have any meaning. That is why the people who have traded and succeeded after a certain period usually say that making money is rote, meaning mechanical, even boring. That is because the natural, instinctual sense of life or death that is hardwired in the amygdala is not kicking in to give one great highs or intense suicidal lows.

 

Remember, technical and fundamental analysis both rely on personal decisions. There is no perfect technical or fundamental buy point. It is all a range that will be proved right or wrong by the market. There is no holy grail. DO NOT PAY ATTENTION TO WHAT IS POSSIBLE FROM MARKET. ALWAYS CONCENTRATE ON HOW MUCH YOU ARE CAPABLE.

 

So, to remain successful in trade, never trade (wish) for profit targets every day, make the right decisions and let the money be a by-product. It is better to stick one trading system across different market conditions. Your learning curve will not improve if you keep on jumping from one strategy to another. Avoid trading when you see a significant drawdown or when you get a few successive failed trades. Successful trading is all about probabilities. Many people making good profits even with a few non-directional trading strategies. Never bet more than 2% in one trade, and do not lose more than 10% on any trading day. Surviving is most important in trading. "Keep two basic rules about winning in trading as well as in life: 1. If you don't bet, you can't win. 2. If you lose all your chips, you can't bet.".

 To conclude this section/blog, if a trader does not recognize this very root cause that arises during trading and able to override it, then no technique, strategy or amount of academic education will give success in the markets. To those of us who are willing to dig deep into our own selves, then this will be a journey worth taking as it will not only affect our trading account and financial health, but our overall outlook as a human being, as in the end, we will not be as swept away by the tides of fear and hope as most people are.

Stock Trading ( Day Trading)-3

                                           iii. Why losses? - It is not that Simple-

Some say- “Trading my friend is simple. You buy low, you sell high.”. “So, what happens if you buy low, and it goes still lower?”  “You buy some more.” And so on. Simple huh. Just do not over-complicate it. It is very easy to cover up(your) lack of adequacy by claiming someone else is over complicating it. Maybe they are, but there is also a large probability that the person claiming that (simplicity), is ignorant of (your/own) why. You see simplicity is not arrived at by simple thinking. That is a delusion. Most people do not think enough. And that includes traders.

 

So, the relevant question is “Do they think enough?” And if they reach judgements very quickly, then they are almost certainly not just not thinking enough, but not thinking much at all. Einstein’s Principle of Equivalence is so simple, and so easy to state. And yet if anyone thinks that it was the product of simple thoughts, they are delusional. Traders generally avoid thinking, form half-baked impressions, and make up strange ad hoc rules and go off in strange directions. Is that complicating? Or is that not doing enough careful thinking.

 

Fact is most traders come across this career seeing a successful friend or colleague or from a story or video they read on the internet. That is basically setting them up for failure immediately. Imagine you watched a pro baseball player win a game and at the end of the day you joined a Rec League to learn and decided to go pro a month later. You would be eaten alive. However, because the barrier to entry is so low (for trading), people do just that. As a result, the washout rate is going to be extremely high, 90% plus leave within 24 months. No one knows what works for them when they start so they try it all. Breakouts, pullbacks, ranges, equities, forex, options. They are chasing 13 strategies at a time and going nowhere.  What one need to realize first is that the average window it takes to learn this career and all the nuances and specifics you need to succeed here is between 5–10 years. But one get frustrated if he cannot learn how (to success) in 6 months of weekend work and /or buying a course for Rs.1997.

 

Remember five deadliest factors that cause traders to fail are self-inflicted. The 5 deadly O’s of trading-Overconfidence*(also see below Dunning Kruger effect)- One must have the confidence to trade but this must be balanced with intellectual humility. Over Leveraging-The higher your leverage, the greater your risk on each trade, likely resulting in irrational decision making. Overriding stops- If the market hits your planned stop, then your trade is done. Take the hit and move on to the next opportunity. Over Exposure- You need to be familiar with how currency co-relations can affect the amount of risk you are exposing your trading account to. Over Trading- Do not stress over one loss or even losing a couple days in a row. Stay focused on your trading performance over the coming months and years.

{*The Dunning Kruger effect (is a cognitive bias in which people with limited competence in a particular domain overestimate their abilities.) We know so little about how markets work that we are incapable of assessing our own lack of competence. We believe we know tons about the markets and how they work. But most of what we know is nonsense taught to us by people who did not know anything either, and like us, they lacked a clear view of their lack of competence. There are so many factors that go into the stock market that nobody knows everything.}

 

In another words most people who lose money do things that greatly decrease probability of success. SO DO NOT: a. Think You Will “Get Rich Quick”:                b. Buy Penny Stocks:                c. Take advice from random message boards:               d. Gamble:               e. Involve friends/family: Listen to Talking Heads:  g. Use Money You Can Not Afford to Lose:             h. FOMO:             i. Fight the Market:             j. Think Technical Analysis is All You Need: (If big news about a stock or market comes out, the technical are irreverent, so always keep watch for headlines). k. Lose Control of Your Emotions:     

 

One more thing must be remembered that, what you know or what is your competence is not important, but what is important is where you stand against the persons and groups with whom you are competing. Retail traders must compete with firms and corporates engaged in stock market who have better capability (manpower, infrastructure) to get advance information (if not inside trading) and analyse its effect for price action. So, if your expectations are not moderated with this reality, it is sure way to failure.

 

Further it is one thing being profitable and another thing is to remain profitable. Any amateur can make money in trading but only professionals keep it. Professional knows how to keep the money he or she makes and puts major emphasis on risk management. He or she understands that playing good defence is the only way to stay in this game long term. If the market gets hot, they may be more aggressive but they also recognize when things are cooling off and know how to take their foot off the gas when they need to, to protect those profits. A professional stays grounded head on a swivel at all the times. On the other hand, Amateurs get greedy. He /she do not respect stop losses, has his/her head in the clouds. Clouded by greed and fear.

To conclude section in short -Human emotions are biggest enemy of day trading. Unluckiest person can make profit in day trading provided he follows a back-tested winning strategy 100%. Why algorithm always make profit in market because they are running on logics and strategies.