Unlike a normal workplace where you’d have a supervisor watching over your head, you’ll be your own manager as a day trader and therefore be accountable for your own results. By writing down your day trading guidelines and observing them, you can build a framework that improves your trading discipline and keeps you from making expensive mistakes. I’ll include my three most relevant day-trading principles in this report. Find expert advice about Axia Futures Trading Courses read here.
Rule # 1: Handle Danger On Every Transaction This concept really is the foundation of my business philosophy. It means my first thought on every transaction I make is not how much potential profit I might gain, but how much money I could potentially lose. Too many traders are too focused on the potential profit and ignoring the value of risk management. I know what my drawback is, and the price at which I will leave the trade if it goes against me (my stop-loss) before I make the transaction. It means that no particular transaction that fails is disastrous. My target as a trader is to smash regular singles and doubles, not usually home runs.
Rule # 2: Restrict Midday Trading The trick to becoming a day trader that is consistently profitable is to understand the importance of the day. Not all periods are created equal in terms of the trading opportunities. In general, stock market volatility and volume are much greater at the open and close of trading and a pronounced mid-day lull in trading activity. Since day traders need flexibility to make money, and they also have to conquer their transaction costs, mid-day trading is often a bad idea. In order to enforce this law, I hold an eye on the clock and dramatically reduce the size and danger of my position in the middle of the day (generally from 10:00 am -2:00 pm CST).
Rule # 3: Research Every transaction I make, I see every trade I do as a learning experience, both for understanding more about the tactics and methods I use and for gaining information about the current market. One of the beauties of trading is that you get immediate feedback on your decisions. During this review process, I center my mind not on the trade results but on the decisions that I have made. Was my size role ideal? Should I get my stop-loss moved? Have I followed up on my risk management plan? There are many times, as any experienced trader will tell you, where poor trades end up being profitable while excellent trades are not working out. It’s important that you learn from every single trade you place to improve as a trader.
By following these day trading rules, I know I can be consistently profitable and do excellent trading in risk / reward. While risk management may sound like an abstract principle, I’ll implement it by knowing my stop-loss before any trade is placed. I am also aware of the most appropriate trading times and limit my trading when conditions aren’t ideal. Finally, by making a comprehensive analysis process, I obtain experience from every trade that I do. Take the time to write down the trade principles and make the market transparent to ensure you stay orderly.