Intraday Trading Exit Strategies

Introduction

Investing can be a complex business. There are many approaches to investing in the stock market, including swing trading, day trading, and investing. Each investor will have their own views and approaches to the stock exchange, depending on what their financial goals are and how long they anticipate earning them. The investment strategies and approach of a long-term investor will differ from those used by day traders and intraday traders.

Day traders, particularly those looking to learn day trading, tend to spend a lot of time studying a variety of parameters. These include price action theory and indicators. This allows them to plan their entry to day trading strategies. Many traders find that when it comes time to exit, their efforts are diminished by the lack of an exit strategy. This is normal. It is easy to believe that you will make profits if your target is met. However, many people fall into the trap of expecting the graph's growth to be greater than they expect, and then holding on to their money for longer periods. All our profits could decrease in a short time.

Let's look at some day trading tips for beginners and some intraday strategies. We also discuss day trading strategies for advanced traders. This article will help you plan an exit strategy that follows up on your well-thought out entry strategy.

1. Risk-reward ratios

This strategy is one of the easiest day trading strategies and can be easily included in any day trading list for beginners. We will go into more detail about this strategy, but the main idea is to make sure you choose a risk-to-reward ratio that is favorable and makes the trade worthwhile. Let's take a look at the first day trading strategy.

Let's say that the stock price is currently at 10 rupees and that you expect it to rise to 15 rupees. This seems reasonable based on your analysis of historical support and resistance levels. But you need to consider the possibility of unfavorable outcomes. Let's say, for example, that the price moves down in an unfavorable scenario. It doesn't rise according to the trend line you plotted. You can achieve a reward-to-risk ratio of 5:1 if you set your stop loss at 9 Rupees. This means that you risk one rupee for the chance of making five rupees. This is a great position.

Your risk to reward ratio is now 2.5:1 if your stop loss is set at 8 rupees. To make five rupees you would need to risk two rupees. Day trading is for beginners. You need to choose a realistic scenario that is both favorable and unfavorable. If you set your target at 20 Rs and the SL at 9, you will achieve a reward-to-risk ratio of 20:1. It might not be possible based on historical charts that this price has ever been met. This strategy will not work if you don't have realistic expectations.

2. A trailing stop loss

Trailing stop loss is one more day trading exit strategy that aims to balance the risk and reward, in an effort to minimize risk. This strategy is best used for day trading beginners. The stop loss is updated each time you raise your sell price to cover your risk. Let's look at one example.

You place your stop-loss orders at the 99 rupee mark if you purchase a stock at 100 Rs. Your stop-loss order would be moved to 100 if the price rises favorably. The stop loss cannot be rearranged after this. For example, if you place your stop loss at 100, and the price moves up to 105, you will not be able to reduce it below 104. Your stop-loss order will be triggered at some point. This allows you to book your profit in a way that effectively reduces risk.

The downside is that you may not be able to sell your stock if your order is large and your daily traded value is low.

3. Time-based exits

Your exit depends on major trading events. Someday traders will suspend all day trading if there is any news about a stock, for example. After the announcement, traders can resume trading.

Conclusion

Many traders spend hours planning their entry point for day trades or intraday trading strategies. If you fail to exit the trade, all the work you have put into identifying the entry point will be lost. We have provided some day trading strategies to help you choose the exit points for a day trade.