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Friday, March 22, 2013

Trading Tips

Trading tips for successful day trading.

The following is a short list of trading tips that can help you stay focused and on a profitable path while day trading.
  • Formulate a trading plan and stick to it. You should know all of your positions, the entries, possible exit targets, and where your stops are going to be before you place a trade online. This helps take the emotion out of the situation.
  • Know the direction of the overall trend. The successful trader tends to follow the trend at all times. If you have the weight of the market behind you, it is much easier to make profits.
  • Protect your trading capital. By trading the correct position size relative to the size of your portfolio, you can keep from having disastrous losses. If you are swinging for the fences on every trade, you are eventually going to strike out. Another way to protect your trading capital is to let a loss go. If you have a losing day trade, never chase it. This almost always leads to compounding losses.
  • Do not be greedy. Figure out your exit before getting into the trade, and take your profits when they are offered.
  • Leave your emotions at the door. By leaving your emotions out of the equation, you can save yourself for making serious and costly mistakes.
  • Don't be a copycat. Do not try to follow somebody else's trading, as what works for them probably won't work for you. Do your own work, and you will come out ahead in the long run.
  • Keep a journal. You should write detailed notes on every trade you take. Write down the technical setup, the fundamentals set up, and any thoughts or emotions that you had while placing trades.
  • Confusion is a signal as well. When confused, simply stay out of the market. There is no reason to press the issue when you don't understand what is going on. It is at this point where trading simply becomes gambling, and gambling is not we are here to do.
  • Never trade out of boredom. Trading out of boredom can be in account killer. Many traders will place trades just to place a trade, with no more thought or strategy than the knowledge that it's a possibility they may make money if they place trade. Again, this is simply gambling and not trading.
You are responsible for the way your day trading business operates. It is you that has to take responsibility for the choices that are made in your trading account. By keeping the short list of rules in mind, you can increase the odds that your choices are at the very least made with logic and rational thinking. Breaking these rules are some of the quickest ways to lose money in the markets.


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