The Most Important Day Trading Rules

One of the secrets to being a profitable day trader is having a listing of rules that you regularly follow. Unlike a typical task in which you will have a boss searching over your shoulder, as a one-day trader you will be your very own boss and therefore be accountable for your individual results. By documenting and adhering to your morning trading rules, you will develop a method which reinforces your trading discipline and also stops you from making expensive mistakes. In this article, I am going to share my 3 most prominent day trading rules.

Rule #1: Manage Risk On Every Trade

This rule is truly the basis of my trading philosophy. It indicates that on every single trade I produce, my initial concern isn’t just how much potential profit I might make, though exactly how much cash I can possibly lose. A lot of traders concentrate too much on the possible income and overlook the benefits of risk management. Before I make some swap, I understand what my downside is as well as the cost at that I am going to exit the trade in case it goes against me (my stop loss). This ensures that no individual losing trade is going to be catastrophic. As a trader, my objective is usually to hit reliable singles and also doubles without always home runs.


Rule #2: Limit Midday Trading

Another key to becoming a continually rewarding day trader is understanding the importance of the time. Regarding trading opportunities, only a few occasions are created equal. In general, there’s a lot more volume and volatility in the stock market at the close and open of trading and a pronounced lull in trading pastime during the center of the day. Because day traders require volatility to generate cash and also should conquer their transaction costs, trading during the morning is often a terrible idea. To enforce the rule, I continue my eye on the clock and significantly lower my position sizes and danger during the morning (generally from 10:00 am 2:00 pm CST).

Rule #3: Review Every Trade I Make

I look at each and every swap I make as a learning experience, each to find out about the techniques and strategies I am using along with to get info about the present market. Among the beauties of trading is you get immediate feedback on your choices. During this assessment process, I concentrate my focus not on the outcomes of the industry but on the choices I made. Was my role sizing ideal? Should I’ve moved my stop loss? Did I adhere to my risk management plan? As any more experienced trader is going to tell you, you will find numerous times where poor trades become successful while excellent trades do not work. To be able to boost as a trader, it is crucial you learn from each and every trade you place.


By adhering to these day trading guidelines, I realize that I can be accurately rewarding and make great risk/reward trades. While risk management may seem like an abstract idea, I apply it by understanding my stop loss before placing some trade. I am also conscious of the most opportune times to exchange as well as control my trading when conditions are not best. Lastly, I gain awareness from each trade I make by creating a comprehensive review process. Take time to write down your trading guidelines to bring clarity to the trading and make certain you remain disciplined. Investors Underground is a day trading community, chat room, and education service. Read a Review of Investors Underground here.