7 Common Mistakes to Avoid When Trading Based on Intraday Calls

Intraday trading can be both exhilarating and daunting. The allure of potential growth in this field can be enticing. However, it’s essential to navigate this terrain with caution. Many traders rely on intraday calls to guide their trading decisions in the fast-paced world of day trading. In this blog, we’ll understand the purpose of intraday calls and address seven common mistakes new traders must avoid while trading based on intraday blogs.

What are Intraday Calls?

• Intraday calls are recommendations or tips provided by analysts, trading experts, or advisory firms to traders for making short-term trades within the same trading day. 
• These calls typically include buy, sell, or hold suggestions for specific stocks, commodities, currencies, or other financial instruments based on analysis of market trends, technical indicators, and fundamental factors. 
• Intraday calls aim to capitalise on short-term price movements and fluctuations in the market, offering traders opportunities to benefit from rapid changes in asset prices.
• It’s important to note that intraday calls come with risks, as market conditions can change quickly, and the accuracy of these recommendations may vary.

7 Common Mistakes to Avoid When Trading Based on Intraday Calls

Following Recommendations Without Proper Research

One of the most significant pitfalls in intraday trading is mindlessly following intraday calls without conducting thorough research. While these calls may come from reputable sources, they are not foolproof. Market conditions can change rapidly, and what may have seemed like a promising trade at the time the call was made could turn sour within minutes. Traders must use intraday calls as their starting point for analysis rather than relying solely on them for their trading decisions.

Ignoring Risk Management

Intraday trading involves high levels of volatility, which means that losses can escalate quickly if proper risk management techniques are not employed. Some traders make the mistake of entering trades based on intraday calls without considering their risk-reward ratio or setting stop-loss orders. It’s essential to have a clear risk management strategy in place to protect capital and minimise losses.

Overtrading

The excitement of intraday trading can lead some traders to overtrade, entering and exiting positions frequently throughout the day. This approach can also increase transaction costs and expose traders to unnecessary risks. Overtrading based on multiple intraday calls can lead to emotional exhaustion and impaired decision-making. It’s crucial to focus on quality over quantity and exercise patience when selecting trades.

Chasing Momentum

Intraday calls often revolve around stocks or assets that are experiencing significant price movements. While it can be tempting to chase momentum and jump into trades based on these movements, doing so can be risky. Stocks that have already experienced large price swings may be nearing exhaustion, increasing the likelihood of a reversal. Traders must refrain from chasing trends for the sake of fear of missing out and must conduct necessary research before entering trades based on intraday calls.

Neglecting Technical Analysis

Intraday trading relies heavily on technical analysis, which involves studying price charts and indicators to identify potential trade setups. Novice traders often neglect technical analysis and rely solely on intraday calls for their trading decisions. While calls may provide valuable insights, they should be used in conjunction with technical analysis to confirm entry and exit points. Ignoring technical indicators can leave traders vulnerable to false signals and unexpected price movements.

Lack of Preparation

Successful intraday trading requires thorough preparation and planning. Before executing any trades based on intraday calls, it’s essential to assess market conditions, identify key support and resistance levels, and establish a trading strategy. Without proper preparation, traders may find themselves scrambling to make decisions in the heat of the moment, increasing the likelihood of costly mistakes.

Emotional Trading

Emotions can run high in the fast-paced world of intraday trading, leading to impulsive decision-making and irrational behaviour. Some traders succumb to fear and greed, allowing emotions to dictate their trading actions. Whether they hold onto losing positions in the hopes of a reversal or exit winning trades prematurely out of fear, emotional trading can sabotage trading success. Traders should remain disciplined and stick to their trading plan, regardless of market fluctuations or intraday call recommendations.

Conclusion

Trading based on intraday calls can be a viable strategy for capturing short-term opportunities in the market. However, it’s essential to approach this style of trading with caution and avoid common mistakes that can jeopardise capital. By conducting thorough research, implementing sound risk management practices, and staying disciplined in their approach, traders can stay ahead of their game and improve their financial portfolios.

Traders can use Share India’s online intraday trading platform to optimise their intraday trading portfolio. With access to advanced research tools and in-depth research backed by data and studied by industry professionals, traders can explore their trading potential with confidence.