Is doing Intraday trading in one particular stock the right move?

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Believe me I have lost a huge sum of money by repeating this mistake. It is a really bad decision to focus on only a single stock while doing Intraday trading.
When you focus on trading single stock, you definitely over a period of time, read about the company and try to predict it fundamentally which is of no use while Intraday trading. Only technical analysis is used for Intraday trading and is the only element which can bring consistent profits over a period of time. However it isn’t that easy.

                                     

Trading on a single stock daily may make you familiar with the expected movement of that stock and the day to day movement it shows; the bullish rally of a stock within a time period of some days and its antithesis movement; the range over which the stock hovers or the exactly approximate time it takes to reach a resistance or breach it. when you get familiar with this movement by watching the charts of that stock for so long you can analyse what’s going to happen next. But one needs to take into consideration that Intraday trading does not only depend upon technical analysis but news also. A mere news of a business magnate selling the stock may generate a bearish rally all of a sudden and the CMP may fall down due to all the other reasons added to it. That’s why its very essential to keep atleast 6–8 stocks in your watchlist and trade not more than 2–3 for a particular day.
Some points to remember for an Intraday trader:
  • Do not trade on a single stock.
  • Remember - “No company/stock/share is good or bad for an Intraday trader.”
  • Never open a second opposite position on the same stock which you have sold just now.
  • When you select a stock for Intraday trading, see if it has sufficient volume (More than 1 million) so that it doesn’t show too many drastic movements or does not get easily manipulated.
  • Focusing on a single stock to trade leads to emotional disharmony. A lot of people get emotionally attached with that stock and there comes a stage when they trade only by intuition and once you start trading by intuition, you are deemed to lose money.
  • Never get emotionally attached to the stock.
  • Always Remember - ”Trend is your friend”.
  • Never trade your whole capital on a single script.
  • Buy small quantities of shares till you gain enough experience.

Happy Trading!

BY ABHIRAM DAPKE

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