Rules to Live By for Daytraders

Most people hoping to make money from the markets believe that the answer lies in tracking down some basic technical analysis tactics that will catapult them to profits.The reality is that day trading is not as simple as rookies think. It really is a profession, and like any profession it entails a learning curve. Reading through an ebook or reading a few simple “tips” will never transform you into a skilled trader.

When researching for a length of time, it is not abnormal for students to start their search for the “holy grail”. They hunt for more indicators, chart patterns, gurus, alert services or the latest top secret daytrading strategies as well as other things that will provide their solution to becoming successful. But here’s the simple truth. Success lies within you .. and it will not come easy.Believe it or not, one of my personal favorite success guidelines is this:

“Successful people do what unsuccessful people are unwilling to do.”

Let’s apply this to trading by using my list of day trading guidelines to Live by,. all of which have to do more with you as compared to the market.The consistency you need is within your mind, not necessarily in the market. Many on the market get irritated because the market typically behaves in different ways than they assume. You can’t rely on the marketplace to be consistent. It is basically a random walk. But occasionally the market does setup with a probability situation that gives you an edge. Your task is be consistent in trading those probability setups and trade them every time they occur.Trade like a cat. Most starters over trade. It is by far the most common trading sins. Your task is to be greater than other day traders in having the self-control to wait patiently like a cat in the bush till the perfect moment (your high probability setup) and then jump on the trade with no reluctance.Profitable trading is just a game of not making mistakes. Keep a list of your daytrading guidelines posted on the wall or on your lcd screen and then stick to those principles perfectly. You will need to be more disciplined than the average trader. Never ever depart from the rules regardless of how good a trade “looks” or “feels” to you when it violates your objective and back-tested rules.

Only trade if you are in an optimal emotional state. Do not ever trade when you’re weary or are in an emotionally unstable state (right after a conflict with a wife or husband or friend for example). Daytrading is more like athletics than academics. Trading on such a short time frame requires you to be capable of making split second decisions, and you’re risking a lot of money once you do. Make sure that your mind is razor-sharp and your emotions are centered.

Keep an elaborate trading log. Every day trading system I have seen has a trading log. However my own experience with dealing with trading students shows that under 10% of them really use it. This is a gigantic mistake. Not only is it advisable to log every single trade, but you also have to record the feelings you had and everything you were thinking when you took the trade. This way your logs will end up as a type of “biofeedback” mechanism for you. I think, this was the difference that made all the difference for me.

These 5 day trading investing rules are not the kind of principles that you were most likely seeking. The masses want guidelines about indicators, price bars, where you get in and when you get out. Granted, you certainly need clear objective rules about those things as well. Yet thousands of traders have these kinds of rules, and yet continue to crash because those rules are about market action.These folks crash because they do not have, or don’t follow, the more important rules are the rules regarding their own actions.If you find yourself resisting the power of these rules about your own behavior, know that you are one of the masses who feels the same way. But since the masses fail at daytrading, you will need to set yourself apart and act different than them.Following these 5 day trading rules are what the retail traders fail to do. Not because they can’t do them, but because they are unwilling to do them. Don’t forget, “Successful people do what unsuccessful people are unwilling to do.”

If you’d like to learn more about day trading see this article from Rob Wessels or take a look at the website of Rob Wessels Daytrading.

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