One of the keys to being truly a successful day trader would be to have a list of rules that you consistently follow. Unlike a regular job where you'll have a boss looking over your shoulder, as each day trader you'll be your own boss and thus be responsible for your own results. By recording and following your day trading rules, you'll create a system that reinforces your trading discipline and prevents you from making costly errors. In this article, I'm going to share my three most significant day trading rules. Rule #1: Manage Risk On Every Trade This rule is really the building blocks of my trading philosophy. This means that on every trade I make, my first consideration isn't how much potential profit I could make, but how much cash I could potentially lose. Too many traders focus too much on the potential profit and overlook the importance of risk management. Before I make any trade, I know what my downside is and the price at which I am going to exit the trade if it goes against me (my stop-loss). This ensures that no single losing trade will be catastrophic. As a trader, my goal is to hit consistent singles and doubles rather than necessarily home runs. weltrade โบนัส #2: Limit Midday Trading Another key to becoming a consistently profitable day trader would be to understand the importance of that time period of day. With regards to trading opportunities, not all times are created equal. Generally, there is much more volatility and volume in the stock market at the open and close of trading and a pronounced lull in trading activity through the middle of your day. Because day traders need volatility to create money and also must overcome their transaction costs, trading in the center of the day is frequently a negative idea. To enforce this rule, I keep my eye on the clock and drastically reduce my position sizes and risk in the middle of the day (generally from 10:00 am -2:00 pm CST). Rule #3: Review Every Trade I Make I view every trade I make as a learning experience, both to learn more concerning the strategies and techniques I'm using in addition to to gain information about the current market. One of the beauties of trading is that you will get instant feedback on your own decisions. In this review process, I focus my attention not on the results of the trade but on the decisions I made. Was my position sizing ideal? Should I have moved my stop-loss? Did I follow my risk management plan? As any experienced trader will tell you, there are various times where poor trades become profitable while excellent trades don't workout. As a way to improve as a trader, it is important that you learn from each and every trade you place. Conclusion By following these day trading rules, I know that I could be consistently profitable and make excellent risk/reward trades. While risk management may sound like an abstract principle, I implement it by knowing my stop-loss ahead of placing any trade. I'm also aware of the most opportune times to trade and limit my trading when conditions aren't ideal. Finally, I gain insight from every trade I make with a thorough review process. Take the time to write down your trading rules to create clarity to your trading and make sure you stay disciplined.
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