Day Trading Rules for Stock Market

If you are new to the idea of day trading and would like to test the waters, there are some simple rules which you should keep in mind. Although it might take some getting used to carrying on your transactions all within the course of a single day, after a while it will become second nature and these ‘rules’ will be easy to keep up with. In the beginning however it is better to keep them handy so as not to lose your footing. Based on advice and pointers from active traders, the following rules should become the day trader’s bible.

All successful day traders will tell you that the key to their success is in adequate preparation. They ‘do their homework’ the night before after keeping an eye on the market throughout that day. Make note of what you are interested in trading so that in the morning you can go over your notes once again to make sure that these are the stocks you will be focused on for the day.

Timing Your Trades
One of the most important things you can do as a day trader is to find a time that is both comfortable and convenient to carry out your trades. Mornings and late afternoons seem to work best for most day traders, but not too early and not too late! It is especially important to steer clear of the last hour or so of the trading day as this is when the markets seem to be all over the place. Your best trades are accomplished when the market is better controlled.

Limit Your Trades
Unfortunately, trading too much within the period of the day exposes you to greater risk for loss. Also, the more you trade, the more your stress level increases so you will want to set a daily maximum. Don’t stray from your limit as this needs to be a steadfast rule. Altogether too many day traders get caught up in the moment and spend too much time making trades rather than watching the ones they already have going. Don’t allow yourself to be glued to your chair! Set a limit and stick to it.

Use Common Sense
So many times day traders saw what they thought was a sure thing and decided to try to cash in on it. Greed cost them their entire investment when it went the wrong way. You probably remember the old cliché, “Rome wasn’t built in a day.” Very few fortunes were amassed literally overnight so stick with your scheduled time and number of trades and you will do far better than putting all your eggs into one basket!

Seeking Advice and Education
Once you have gotten your feet wet in day trading you may be tempted to go it alone. This can be one of the biggest mistakes you’ll ever make. Take the time to learn as much as you can learn and seek the advice of those who have been around a while. If you have children you will understand this concept perfectly well. You want your children to listen to you and learn from your mistakes. Don’t act like your child and insist on doing it your way when you are still an infant. Learn from the mistakes (and successes!) of those who went before you.

Pay Heed to the Indicators
Perhaps one of the biggest mistakes which a trader can make is to try to stick it out in hopes that the downward spiral is bound to reverse itself. Remember, you are in it just for the day. You are not holding onto stocks for extended lengths of time and there may not be enough time within the course of a day to see that reversal. If your gut tells you it’s time to get out then follow your instincts. (One tip which many day traders follow is to set a limit to the amount of loss they are willing to take. If your loss reaches that point, get out from under it and move on.)

These day trading rules for stock market are compiled from advice given by traders who have been successful over a period of time. Anyone can have luck the first time (or second and third times) around, but the successful day trader is on an upward slope over time. Follow these rules and you will see your successes accumulate over time as well.

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