Why Do Traders Lose Money in Intraday Trading

Intraday forex trading can be a short-term profit-making trade strategy if you play your game smartly. However, it is not for the faint-hearted. Intraday trading is a high-risk trading strategy that can result in a huge loss of money.

The majority of forex traders lose at intraday trading because they believe it's all about having the right idea and trading in mass. Whereas, intraday trading is all about risk management, strict adherence to trading principles and following the market trend.

This article will highlight common reasons why intraday traders lose, and how you can avoid such mistakes and make a profit in intraday trading.

What is intraday trading?

Intraday trading involves opening and closing trade within the same day. It is not specific to the forex market, as it is also practised in the stock and index markets. However, intraday trading is more common in forex trading due to the market’s high liquidity.

Intraday traders rely on price fluctuations within the same day to make a profit. They open bids at the beginning of a trade session and close the trade before the end of the day. It is common for a day trader to open a trade and close it within minutes or hours. Many traders also rely on intraday trading indicators to analyse the market.

Intraday trading is appealing for many traders because they can easily make a profit during the day without the need to have a sleepless night on whether the price might change overnight. Aside from that, intraday trading saves you payment of commission for keeping trade positions open overnight.

Although day trading can result in high short-term profits, it has high loss potential. As a result, day trading requires experience, discipline and strategy.

Reasons why traders lose money in intraday trading

Lack of discipline

Most intraday traders fail because they do not stick to a proper plan. Intraday trading requires proper planning ahead and strict adherence to your strategy. Your plan will depict a clear picture of how to open and execute your trade.

You should have a profit target, determine your point of stop-loss, metrics to consider, and determine the perfect trading hours. Sticking to your preset plan will help you reduce loss.

Not setting a stop-loss order

Most day traders fail woefully because they do not have a proper risk management mechanism. A stop-loss order allows traders to close their position when they have lost funds to a certain point. However, most traders lack this discipline. They ignore setting such an order and continue maintaining a position till they lose all their funds.

It is safe to risk just 1% of your account balance on each trade. Loss of more than 1% on several trades in a day can accumulate and lead to monumental loss.

Seeking rapid loss recovery

Loss is part of trading. Most traders find it hard to accept the loss and continue trading aggressively after a loss hoping to recover. The averaging long position often leads to greater loss.

It is wise to accept defeat very early, analyse possible causes and plan for the next day.

Relying on rumours and recommendations

In the era of social media, it is easy for some traders to rely on investment news and tips from self-acclaimed finance analysts to make trading decisions.

Some day traders who do not take their time to read charts and interpret results to get the right trend often lose woefully. Although there may be some iota of truth in some rumours. It is safe to conduct your analysis before you act on any recommendation.

Before opening a trading position, you should review currency values, volumes, and technical and fundamental drivers.

Trading against the trend

Intraday trading relies heavily on market trends. Some day traders end up in loss when they deliberately go against the trend without chart pattern breakout or resistance.

It is ideal to enter the long position when the trend is moving upward and go short when there is a downward trend. Counter trend strategy is reserved for highly experienced traders with good stop-loss backup.

Trading on emotion

Trading and emotion shouldn't mix. Day traders who trade based on emotions rather than technical and fundamental analysis end up in huge losses. They sell at the sight of early profit or continue trading despite the continuous loss.

Do not be greedy or scared. Research and adhere strictly to a profit target and stop-loss order.

Over trading and trading every day

Day trading is risky. It is easy to win and lose monumentally. Some day traders see leverage trade as an opportunity to trade in mass and make a quick profit. Over trading during a day trading has led to an immeasurable loss that has forced many traders out of the market. They stand to lose both their capital and leverage, especially when the market is volatile.

Another reason day traders lose is that they forget that every day is not a trading day. It is important to analyse past market trends to know good and bad trading days. Only trade on days you are confident of success and keep off when you are pessimistic about the market movement.

How much do day traders make?

Despite the risk of loss attached to intraday trading, some smart day traders make more profit. The amount of capital made by each day trader will depend on the trading strategy, amount of capital and risk management practices.

Is intraday trading profitable?

Intraday trading is profitable if you do your homework. You can make a small profit on several trades in a day and sum it up to a tangible amount. You profit from intraday trading if you make meticulous market analysis, have a good risk management strategy and partner with expert forex brokers.

Final words

Intraday trading is not rocket science. You can make a profit from intraday trading if you apply all day trading principles and partner with an experienced brokerage firm.

Blueberry. provides a seamless online trading platform in Australia to kickstart intraday trading. Take a look.

Disclaimer:

All material published on our website is intended for informational purposes only and should not be considered personal advice or recommendation. Traders should carefully consider their objectives, financial situation, needs, and level of experience before entering into any margined transactions.

Disclaimer: All material published on our website is intended for informational purposes only and should not be considered personal advice or recommendation. As margin FX/CFDs are highly leveraged products, your gains and losses are magnified, and you could lose substantially more than your initial deposit. Investing in margin FX/CFDs does not give you any entitlements or rights to the underlying assets (e.g. the right to receive dividend payments). CFDs carry a high risk of investment loss.