Have you ever been panicked due to you night position?
Certainly “YES”.
“NOON” here is NO-OVERNIGHT .
We take take trade for intraday purpose but never square off unless we get profit to the day. Once we carry forward the trade multiple mind set negativity comes in our mind once market close we research a lot and worry what will happen tomorrow.
Next day we see we are loosing more money than yesterday, now we make an excuse that “I AM AN INVESTOR” .
In couple of days we see that we are loosing and not seeing any improvement so we square off in loss thinking that we would cover all losses by intraday.
Do we do intraday by next time?
“NO” this cycle which we discussed goes forever and we never follow “NOON” rule and neither become trader nor investor.
Read more: about discipline of trading in stock market
Not carrying overnight positions, also known as day trading or intraday trading, can offer several benefits for traders. Day traders open and close all their positions within the same trading day, without holding any positions overnight. Some of the advantages of this approach include:
- Reduced Overnight Risk: Holding positions overnight exposes traders to various overnight risks, such as geopolitical events, economic data releases, and unexpected news that can impact the market when it reopens. By closing all positions before the market closes, day traders avoid these potential risks.
- Avoiding Gap Risk: Overnight gaps occur when the market opens significantly higher or lower than the previous day’s closing price due to news or events that occurred after the market’s close. Day traders can avoid potential losses from these gaps by not holding positions during non-trading hours.
- Less Stress and Emotional Burden: Trading can be emotionally challenging, especially when positions are left open overnight. Day traders don’t have to worry about how the market might move during their sleep or outside trading hours, reducing stress and emotional burden.
- Improved Focus: Day traders focus solely on intraday price action and trends, which can help them develop a more precise and specialized trading strategy. They don’t need to monitor or adjust positions after the market closes, allowing for better concentration during trading hours.
- Quick Decision-Making: Day traders make decisions quickly, as they have limited timeframes to enter and exit trades. This can foster improved discipline and prevent overthinking during trading.
- Less Capital Required: Day trading doesn’t require as much capital as holding positions overnight, as traders don’t need to meet minimum margin requirements for holding positions overnight.
Despite the benefits, it’s essential to recognize that day trading also comes with its challenges:
- Increased Trading Costs: Day traders may face higher trading costs due to more frequent trades, such as commissions and fees.
- Market Volatility: Intraday trading can be subject to higher market volatility, which may result in rapid price swings and increased risk.
- Time Commitment: Day trading requires active monitoring of the markets during trading hours, which can be time-consuming.
- Limited Opportunities: Not all trading opportunities may be suitable for day trading. Some assets may require longer timeframes to develop a trend or breakout.
Overall, the decision to trade without holding overnight positions depends on a trader’s trading style, risk tolerance, and market conditions. Some traders find success and prefer the faster pace and reduced risk associated with day trading, while others may opt for longer-term strategies that involve holding positions overnight or even for weeks or months.