Rules & Tips For Day Trading
Rules to remember and tips to follow before you even start thinking about becoming a day trader.
Day Trading Is Not A Form Of Investment
Day trading isn’t the same as investing. It isn’t part of your retirement portfolio of stocks and bonds. Day trading is a high-risk business where you could lose everything if you don’t succeed.
Before you begin day trading, you must recognize this reality.
Day Trading Is Not Gambling
Day trading, on the other hand, is not a type of gambling. Do not begin if you are not prepared to take it seriously and work hard. The first two rules are designed to help you change your mind about day trading. These “rules” are already with you if you start with the appropriate mindset.
Make A Day Trading Plan For Everything
Consider all possible scenarios and make plans to address them. Plan for things you won’t be able to plan for, which includes knowing when to utilize your judgment. Among the most important aspects are:
- Where should you trade?
- When should you trade?
- What are the best instruments to trade?
- What is your trading strategy, and how do you put it into action?
- How much are you willing to risk per trade?
- What happens when the broker, the internet, and the computer don’t work?
- The trading strategy is always a work-in-progress. Continue to refine it and add to it.
For The First 15 Minutes Of The Trading Session, Sit On Your Hands
The initial 15 minutes are usually extremely volatile, with little price action to analyze. So, for the first quarter of an hour, sit on your hands and study the market tone.
Take a look at the opening range scalp trading method if you want to contemplate a transaction just after the 15-minute mark.
Review Your Trades At The End Of Each Session
There is a learning opportunity after each session. Each trade adds to a feedback loop that can help us improve our trading results.
Use Stop-loss Orders
A stop-loss order is required for every trade. We must always be aware of the amount of money we stand to lose. If you disagree, I urge you to think about it.
For Taking Profits, Use Limit Orders Or Trailing Stop Loss
Because we close our trades before the end of the session, the profit potential is reduced. As a result, we should use limit orders or trailing stop losses to take our profits and run. Day traders should avoid waiting for the century’s bull run.
Only Participate In The Best Trades
Make sure the trades you make are well-thought-out. There should be some logical and technical thought process behind your every trade. Even if it eventually doesn’t pan out at least you will learn what assumptions or techniques were wrong. Don’t ever execute trades based on headlines or gut feeling.
Do Not Chase The Market; Always Be In Control Of Yourself
Do not chase the market if it has gone off without you. Nobody can predict how the market will act. The market is beyond your control. However, you have influence over how you react to the market. Stay in the zone at all times.
Lower Your Trade Size When In Doubt
When you’re unsure about your trading edge, reduce your trade size. This is a damage-control strategy. Reduce your transaction size to zero until you’ve determined your trading edge.
When Day Trading, Accept Loss Days
Day traders, for whatever reason, believe that they will benefit at the conclusion of each day. However, because trading is a probabilistic game, you will have losing days.
Accept them and go on with your life. If you refuse to accept losing days, you will make irrational actions such as overtrading, which will quickly wreck your trading account.