There is only so much time in the session each day and there is only so much ground prices can cover in that time. You probably heard this rule hundreds of times but do you really follow it each and every time. Avoiding stop loss orders is the biggest reasons why small losers turn into large highly unmanageable positions that can turn your trading career into a nightmare quickly. If you are going long you probably want to pick the strongest stock out of the industry group and if you are trading short you would probably want to pick the weakest stock in that industry group.
Next time I will show you some more day trader rules that will improve your profit potential and reduce your stress level.
GOVERNMENT REQUIRED RISK DISCLAIMER: FUTURES & FOREX TRADING HAS LARGE POTENTIAL REWARDS, BUT ALSO LARGE POTENTIAL RISK. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING.ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. Most often traders simply lack the required experience to know which rules can make or break their account and unfortunately learn the hard way after the fact.
Don’t let this happen to you, follow your trading plan accordingly and make contingencies for situations that are not likely to happen. For example if you are trading semiconductor stocks you would compare the stock you want to trade with other stocks in the semiconductor industry group or if you intend to trade e-mini futures contracts you should compare the e-mini NASDAQ to the e-mini SP futures contract. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. THE PAST PERFORMANCE OF ANY TRADING SYSTEM OR METHODOLOGY IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. If you are not going to take it seriously and put in hard work, do not even start.The first two rules seek to adjust your attitude towards day trading. Keep refining it and add to it.If you have your trading plan in your computer, open it before the trading session each day.
If you have it printed out, place it beside your trading computer where you can see it.The Alpha and Omega of Day Trading4. A simple rule has turned this commonplace pattern into a powerful setup.In fact, this added rule is asking for confirmation of the pattern in advance.
Alpha – Sit on your hands for the first 15 minutes of the trading sessionThe first 15 minutes are usually very volatile, without much price action available for analysis. The winning example is a great combination of a head and shoulders formation and a three bar reversal pattern.However, due to the extra rule, the signal bar (Bar 3) tends to have a large range. Each trade contributes to a feedback cycle that can improve our trading performance.Each trading session starts with doing nothing and ends with reviewing everything.
Waiting for the bull run of the century is not for day traders.Use a trading platform that allows you to enter stop-loss orders and target limit orders together with your trade entry. Cancel reply Get Updates via EmailSubscribe for TSR updates and get a free eBook - “Day Trading with the Anti-Climax Pattern”. Taking the best trades is so important that we devoted an article on it.Day Trading Rules That Will Save You9. When in doubt, lower your trade sizeLower your trade size when you are in doubt of your trading edge.
Accept losing days when day tradingSomehow, day traders expect to end each day with profits. If you refuse to accept losing days, you will do stupid things like overtrading and ruin your trading account pretty soon.The last three rules are lifesavers.
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