If you want to become a profitable day trader, you need to learn the fundamental rules of trading success. Day trading offers excellent opportunities to make money. However, you must utilize those opportunities wisely to become a successful day trader. Accomplished traders follow specific rules to make their efforts goal-oriented. Here are the 7 sacred rules of successful day traders you can follow to generate the best trading results.
If you are interested in trading futures, get funded by one of my recommended futures trading evaluation prop firms. You can read all my reviews here: Futures Trading Evaluation Reviews. I’m currently funded by multiple firms with over $1M in aggregate capital.
1. Developing, testing, executing, and engaging a systematic trading plan
Many people follow what experienced traders do. Having a plan is an essential thing in trading. However, you should not follow others blindly to achieve your trading goals. Successful traders develop well-thought-out plans that meet their unique needs. What is a trading plan? It refers to a set of rules that clearly defines the entry, exit, and money management formula for every trade you make.
Profitable day traders create a personalized strategy using their research and experience. Beginners have to go through trial and error methods to develop such a strategy that delivers consistent results. Modern technology lets you test a trading plan before using real money. With the help of historical data, backtesting software programs let you experiment with your trading plan to check its viability.
Another option available to test your tactics is to run through the charts manually. It gives you insightful information on how your trading strategy worked in the past. Once you develop a plan, you have to follow it consistently to make your efforts successful. The best day trading strategies always focus on cutting losses quick and maximizing profits.
Execute your strategy with discipline to get the results you want. As you gain experience, you need to engage your trading plan regularly to make it more effective based on the ever-evolving trading scenarios. Try to update the strategy weekly and monthly to bring fresh ideas and remove flaws. Successful traders follow this approach to minimize risks and optimize profits.
2. Making maximum use of technology
Technical analysis is the backbone of day trading. Experienced traders assume that other traders always take maximum advantage of the technology to stay competitive and win trades. You need to adopt this mindset to make your trading efforts result-driven. Charts provide insightful information on trading trends and patterns. Successful traders analyze the charts to get a clear idea about the market. There are many online platforms available that help you evaluate the performance and monitor trades. They follow several platforms to make a detailed study of evolving situations. You must explore all options that technology offers to make informed day trading decisions.
When you use technology to your advantage, you can keep track of the latest trends and developments. So leverage on technology to become a profitable day trader. You can utilize technology in many different ways. Backtesting a strategy is a good example. Another option available is to build a scanner to discover market opportunities. Many people use a robot to manage trades when they are busy. There are endless possibilities for you to explore.
Patience in trading is critical to your success. Effective utilization of technology helps you control your emotions. With the help of technology, you can use a more stabilized approach in day trading. Accomplished day traders use technology for cutting losses quick and increasing their profits. They stay patient to identify the right opportunities and capitalize on them to take profit margins to the next level. The bottom line is that never undermine the importance of technology in day trading.
3. Never chasing losses impatiently
Expert traders always look at the larger picture when trading. That is to say, they perform trading in perspective to make the right moves at the right time. Losses are inevitable in day trading. However, you should not turn panic when you lose money. Many traders chase their losses to make matters even worse. You should not repeat this critical mistake.
When you are having a plan, you must focus on implementing it perfectly to accomplish your day trading goals. Everybody has to deal with wins and losses. You should not let emotions affect your losses. When you fail, study the reasons carefully and learn from your mistakes to become a better trader. That is what master traders do.
If you chase your losses and make efforts to recover your money immediately, you are making things more complicated. Never dig your way out. Running after losses rarely ends in a positive gain. The day trading market doesn’t work the way you want. The best thing to do is to show patience and seize the opportunities when they turn up. Successful traders always follow this approach to accomplish their goals.
4. Trading with money that they can afford to lose
Successful traders only risk what they can afford to lose. It is one of the basic principles that you need to follow. You should not use all your hard-earned money in day trading. It is a critical mistake that many people make. You must allocate money for other needs before deciding on the amount you want to invest in day trading.
Losing money in day trading is a painful experience. If you risk what you cannot afford to lose, you may make your life miserable. A huge loss affects the lives of your dear and near ones adversely. Always allocate a fund that doesn’t make your life miserable. That is how a profitable day trader operates.
Expert traders always focus on protecting their capital. If you know how to protect your capital, you can stay calm and patient and make objective day trading decisions. It doesn’t mean that accomplished traders never lose money. However, they make sure that the losing traders do not cause lasting damage to their capital. So, you must learn the art of risking the right amount per trade for your capital and yourself.
5. Utilizing the Stop-Loss strategy
A stop-loss strategy helps traders avoid huge losses when things go against their trading decisions. Stop-loss makes day trading less stressful. Expert traders use this method to limit losses. You need to follow this tactic as you keep learning day trading.
The mindset of a profitable day trader is to treat trading as a business. If you analyze the growth of a successful business, you can find lows as well as highs. Day trading is like a business journey. This mindset brings the right level of commitment and makes you better equipped to run your trading business.
With the help of a systematic trading plan, you should focus on the process with 100% dedication. Results are vital aspect, but you should not get carried away with immediate gains or losses. So, following a stop-loss strategy helps you run your trading business with consistency and commitment.
Accomplished traders don’t recommend to day trade without a stop-loss strategy even if people make winning trades. According to them, exiting with a stop loss even when having a losing trade is a good trading practice, provided the trade price falls within the rules of your trading plan. The best approach is to treat trading as a business and use the protective stop-loss strategy to minimize risks.
6. Calibrating positions
One of the most vital aspects of day trading is the leverage you put on in a position. Master traders put more leverage on trades for which they have absolute conviction. They choose these trades with the help of detailed research and analysis. It is one of the sacred rules of successful day traders.
Many people run high leverage on weak conviction. This approach is most likely to generate losses. It is a critical mistake to use high leverage on trades that made you lose money previously. It is often by many day traders to cover the losses. This method leads to more losses.
Successful traders calibrate their positions efficiently to generate maximum profits. If these people have made money in their previous trades, they utilize those profits as instruments of leverage on their future trades. You need to follow this strategy to become a profitable day trader.
7. Handling stress efficiently
Day trading is a stressful activity. The market changes continuously, and new situations emerge within seconds. As a day trader, you are risking your money to gain money. This situation makes traders nervous and stressed.
Experienced traders know how to handle the stress generated by the ever-fluctuating market. When positions run into losses, they don’t get nervous. These people stay calm and find their own ways to overcome the losses. Every trader has to learn the art of handling stress and showing patience when things go wrong. The best step forward is to wait for the right opportunity that can be capitalized to cover the loss.
These are the 7 sacred rules of successful day traders. Having a well-designed plan is essential to your trading success. You must test, execute, and update the strategy to become a profitable day trader. Make maximum use of the technology to make your efforts goal-oriented. Never chase your losses. Stay patient for the right opportunity and take advantage of it. Don’t trade with money you cannot afford to lose. You should use the stop-loss strategy to minimize losses. Don’t forget to calibrate your positions. Lastly, you must learn how to handle stress. If you follow these rules, you can become a successful trader.
Day trading is a lot of work. You have to have both technical skills as well as personal skills to manage yourself, daily. If you like a challenge and the rewards that come from it, I highly recommend day trading.
If you are interested in trying out futures trading, be sure to visit my Trader Evaluation Reviews page to see who you could be funded with to trade futures.
Be Notified Of New Trader Evaluation Promotions
Submit your email if you want to be notified of new trader evaluation promotions. I never spam nor sell anything. Usually 2-3 emails a month are sent with the latest deals.
Futures and forex trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones’ financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.
Hypothetical Performance Disclosure:
Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown; in fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk of actual trading. for example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all which can adversely affect trading results.
You can read more here: Risk Disclosure
The external links on my site and in my video descriptions to trader evaluation companies and software companies are primarily affiliate links. I earn a commission from these companies on any sale made from people visiting these links. That said, I only recommend companies and software I personally use and actually do recommend. Believe me, I turn down a lot of companies who approach me. You can read my full Affiliate Disclosure here.
The content provided is for informational purposes only. I do my best to keep the content current and accurate by updating it frequently. Sometimes the actual data, rules, requirements and other can differ from what’s stated on our website. CanadianFuturesTrader.ca is an independent website. You should always consult the rules, faqs, knowledge base and support of any of the websites and companies we link to or talk about on our site. The information on their site will always be what ultimately dictates the current rules of their program, software or other. While we are independent, we may be compensated for advertisements, sponsored products, or when you click on a link on our website. The contributors and authors are not registered or certified financial advisors. You should consult a financial professional before making any financial decisions.