Practical Tips, Tactics and Rules for Beginning Day Traders
1. Do not expect to become an expert day trader right away. It takes
considerable time, practice and effort to learn the ropes.
2. Paper trade or use a simulated trading Web site to practice your trading
techniques before you use your own "real" money.
3. Eliminate the fear of losing because "scared" money rarely profits.
4. Always limit your losses - use stop orders.
5. Learn from your losses - take advantage of each loss to improve your
knowledge of the market.
6. Never allow large profits to turn into losses. Consider selling if the
market moves against you by about 25% or so from your peak profit point.
7. If the markets on a given day are not performing or reacting the way you
expected, it is best to simply get out.
8. Never add to a losing position. It is a prescription for disaster.
9. Try to predict the general direction of a stock price but do not try to
pick tops and bottoms. You will rarely succeed in accomplishing this.
10. Remember that standing aside is a position and often the best one to take
if you cannot form an opinion as to where the market is heading on a given
11. The key difference between winning and losing day traders is the ability
to exercise discipline to avoid mistakes or bad trading tactics.
12. You must subordinate your will to the will of the market. The market is
13. Always keep records of your trading results and analyse the results.
14. Good day traders generally sell into good news and buy on bad news.
15. Patience, perseverance, determination and a rational trading plan are the
key attributes of a successful day trader.
16. Never get emotionally involved with your trades as emotions often work
17. Do not try to profit on every trade. It is the total profit you make that
matters not the number of individual wins.
18. Learn when you can rely on instinct as opposed to analysis.
19. Don't chase momentum if you are unsure as to the exit point. Assume the
market will reverse itself as soon as you open a position.
20. Be flexible. Remember that different strategies suit different days and
21. Decide each day how much risk you are willing to take and stick to your
22. Access to timely information and fast execution of trades is essential to
day trade successfully. Subscribe to a good financial information service and
open an account with a Direct Access Trading firm or an online broker that
caters to day traders.
23. Do not try to focus on too many stocks at once. Limit your focus to a
24. Always think positive no matter how much you lose. Accept your losses
gracefully, try to learn from them and move on.
25. If you do not find day trading fun or find it too stressful you will not
likely be successful. Try some other activity.
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