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11 Rules In Stock Trading: How to Day Trade for a Living

Rule 1: Day trading is not a strategy to get rich quickly.

Rule 2: Day trading is not easy. It is a serious business, and you should treat it as such.

Rule 3: Day traders do not hold positions overnight. If necessary, you must sell with a loss to make sure you do not hold onto any stock overnight.

Rule 4: Always ask, “Is this stock moving because the overall market is moving, or is it moving because it has a unique fundamental catalyst?”

Rule 5: Success in day trading comes from risk management – finding low-risk entries with a high potential reward. The minimum win:lose ratio for me is 2:1.

Rule 6: Your broker will buy and sell stocks for you at the Exchange. Your only job as a day trader is to manage risk. You cannot be a successful day trader without excellent risk management skills, even if you are the master of many effective strategies.

Rule 7: Retail traders trade only Stocks in Play, high relative volume stocks that have fundamental catalysts and are being traded regardless of the overall market.

Rule 8: Experienced traders are like guerrilla soldiers. They jump out at just the right time, take their profit, and get out.

Rule 9: Hollow candlesticks, where the close is greater than the open, indicate buying pressure. Filled candlesticks, where the close is less than the open, indicate selling pressure.

Rule 10: Indicators only indicate; they should not be allowed to dictate.

Rule 11: Profitable trading does not involve emotion. If you are an emotional trader, you will lose your money.

Day trading requires proper tools, software and education. As with any business, you must have the right tools to succeed.
  • Business Plan
  • Education
  • Startup capital (cash)
  • Right tools and services
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