The Three Most Important DAYTRADING Rules

One of the keys to being truly a successful day trader is to have a list of rules that you consistently follow. Unlike a regular job where you’ll have a boss looking over your shoulder, as each day trader you’ll be your personal boss and thus lead to your own results. By writing down and following your day trading rules, you’ll create a system that reinforces your trading discipline and prevents you from making costly errors. On this page, I’m going to share my three most important day trading rules.

Rule #1: Manage Risk On Every Trade

This rule is really the foundation of my trading philosophy. It means that on every trade I make, my first consideration isn’t how much potential profit I could make, but how much cash I could potentially lose. Too many traders focus an excessive amount of on the potential profit and overlook the importance of risk management. Before I make any trade, I know what my downside is and the price at which I’ll exit the trade if it goes against me (my stop-loss). This means that no single losing trade will be catastrophic. As a trader, my goal is to hit consistent singles and doubles rather than necessarily home runs.

Rule #2: Limit Midday Trading

Another key to learning to be a consistently profitable day trader would be to understand the importance of the time of day. With regards to trading opportunities, not absolutely all times are created equal. Generally, there is much more volatility and volume in the stock market at the open and close of trading and a pronounced lull in trading activity during the middle of the day. Because day traders need volatility to make money and in addition must overcome their transaction costs, trading in the middle of the day is frequently a negative idea. To enforce this rule, I keep my eye on the clock and drastically reduce my position sizes and risk in the center of your day (generally from 10:00 am -2:00 pm CST).

www.daytradeforgood.com/2020-in-review-matthew-poll-and-kevin-jones-of-lehi-utah-donate-154000-to-charities-in-2020/ Rule #3: Review Every Trade I Make

I view every trade I make as a learning experience, both to learn more about the strategies and techniques I’m using in addition to to gain information about the existing market. One of many beauties of trading is that you get instant feedback on your decisions. In this review process, I focus my attention not on the results of the trade but on the decisions I made. Was my position sizing ideal? MUST I have moved my stop-loss? Did I follow my risk management plan? As any experienced trader will let you know, there are various times where poor trades become profitable while excellent trades don’t work out. As a way to improve as a trader, it’s important that you learn from each and every trade you place.


By following these day trading rules, I know that I can be consistently profitable and make excellent risk/reward trades. While risk management may sound like an abstract principle, I implement it by knowing my stop-loss prior to placing any trade. I’m also alert to probably the most opportune times to trade and limit my trading when conditions aren’t ideal. Finally, I gain insight out of every trade I make with a thorough review process. Take time to write down your trading rules to create clarity to your trading and make sure you stay disciplined.

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