Online share trading has become easier with the advancement in technology even for the average investor. But intraday trading demands a lot more effort than other forms of trading. It is very lucrative and challenging at the same time. Although most retirees are risk-averse investors, some of them also want to get in on the game to utilize their time in technical analysis of the stock market. There are different techniques and strategies that help day traders to make money and minimize losses. Let us understand day trading and considerations for retirees.
Intraday Trading Meaning
Intraday trading involves the trading of financial securities within the same day i.e. buy and sell in the same trading session. It is also called day trading. In case, the trader forgets to close the positions before the trading session ends, it will be squared off automatically. Traders are allowed to trade as many times as they want within a trading session as per their strategy. There is the need for a trading account to trade in securities on the stock exchange. A trading account is known as the primary account of day traders.
Day Trading for Retirees
One should know the basic rules and techniques of Intraday Trading to minimize losses. Retirees are advised to invest a limited amount only that they can afford to lose without facing financial issues.
Day traders are typically well-funded and have enough knowledge about the stock market. They are capable of capitalizing on small price movements of stocks with high liquidity. A retiree can use a part of his corpus in day trading and should invest most of his funds in fixed income mutual funds or other safe instruments.
Basic Rules and Techniques
Day traders must keep an eye on economic statistics, earnings declaration by companies, market expectations, and market trends. Markets react to every announcement in the economy to the fullest through which day traders can earn great profits.
Following are the basic rules and tips that will help retiree to make profits:
1. Choose liquid stocks
Select liquid stocks so that you can take exit easily. Stocks with low liquidity may make be difficult to square off at desired price.
2. Set Entry and Target Prices
Start with a strategy. Have a clear trade plan before initiating a trade. Use target price and stop loss in every relevant situation.
3. Start small
Retirees, like beginners, are also suggested to start trading with small amounts so that you do not have to bear heavy losses.
4. Utilising Stop-Loss
Do not ever try to forget to apply stop loss on your trades. If you stuck in an unfavorable trade, do not wait for the stop-loss trigger. Take the exit immediately.
5. Disciplined Approach
Be disciplined. If you have a strategy, stick to it and do not get swayed by anyone’s view.
6. Act like Trader Only
Intraday trading is different from investing. Strategic factors are different for both. Investing depends more on fundamentals while trading works with technical details.
7. Monitor Market
Retirees have enough time to monitor market movements closely. Utilize your time and place the right trades. Focus on intraday trading indicators, which helps to determine the stock movements.
Traders should keep in mind that profitable intraday trading is possible but it is a controversial phenomenon with inherent danger. Day trading can be a viable way to earn a profit with the right risk management. Retirees or any other day trader must not take a risk of more than 1-2% of their total trading capital on a single trade.