BOOK YOUR LOSS: INTRADAY TRADER!!Uncategorized
Hello ! Book Your Loss : Intraday Trader is an article basically clears your thought and make you fearless for booking the loss by self. One of the biggest mistake one rookie trader do in his innocence or in fear of Loss booking. Let us discuss a situation, we bought 100 scrip of India Bull Housing Finance on 03.06.2019 @ Rs. 814.00 for Intraday with a Target of Rs. 825.00. As you found that after taking trade it sustains around the same level and then starts going down afterwards. After some time, your trade starts showing losses and goes as low as Rs. 790.00 level.
Now what will you do??
Decision 1 : You will book the loss and close the trade.
Decision 2 : You will convert your Intraday Position to delivery.
Lets discuss : You go with decision 1 and close the trade at Rs. 800.00 around and book losses of Rs. 1,400.00 on the same day. It is as simple as that.
You go with decision 2 and carry forward the position by converting it into delivery position, now follow the chart attached in this post, you can see that stock remain in red on the next day, henceforth you still not exit from the trade and keep the position open. Now on the third day, you can see a gap down opening and stock remains in red throughout the day and closes at very low level. Now you have two options left with, book the loss now or go with the same flow as that of earlier. Consider you put your position forward again, you will realize that you are actually in a trap and stock keep going down even as low as Rs. 490.00 and puts your loss to Rs. 32,400.00. Now tell me, will you remain in the trade??
Most of the retail trader finally realize the trap and take exit by booking a huge loss.
Reasons to take decision 2 :
We never check the different important levels before placing the trade specially in intraday, once we take the trade and starts facing losses on the Intraday, we starts considering different charts, levels, indicators etc etc., out of all those infinite set up, you will found a setup which will show that stock now at very good level to buy more or stay in the game and tomorrow it will go high and give you profit. Sometimes, even we go further and starts averaging.Mostly, we consider only that setup/indicator which shows profit on next morning and refused to consider other hundreds of setup or indicator showing not to carry the action forward.
- Not a single scrip to be carry forward for next day if you are in loss.
- Book your loss at stop loss only, never trail your stop loss.
- Small loss is much better than a big loss and also saves your capital.
- Averaging should always be done, when you are in profit, no averaging to be done in loss, book your loss straight away.
- Take it as a business, where you capital is evolved, and you work only till your capital alive.
- Make arrangement for current asset and current liabilities, same as that of in business.
Exception: (Not recommended)
Only condition to take the intraday position forward, when you are having exposure in good stock and you have gained 1:2 profit in the day, even in that condition we should book profit at least in our half lot and can carry forward the rest lot for next day or for positional trading. For e.g., in the above case 50 scrip on the same day.
As in case if there is gap down opening on the next day, you can have sufficient cushion to save your capital, as capital saving is the foremost target.
So, whats you experience?? You can also visit our blog @ https://nsestocktraders.blogspot.com/2019/06/stop-loss-needed-or-not.html.
We hope reading the article “Book Your Loss : Intraday Trader” has a good impact on your knowledge. Thank You.